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Last Updated: Monday, 5 January, 2004, 23:30 GMT
Jail for Tajik bead scam founders
Beads
Three men have been sent to jail for running a scam which impoverished thousands of women in Tajikistan.

The Supreme Court of the central Asian republic convicted the three for a $41m pyramid scheme which saw them sell beads to 60,000 Tajiks.

They promised to buy back the beads - once threaded together - for 150% more than the $11 they sold them for.

But the scheme was a fraud, costing the victims an average $700 in a country whose average wage is $17 a month.

Jamshed Siyayev, director of the Jamal & Co company that ran the scheme, was sentenced to 11 years' hard labour.

His chief accountant, Vyacheslav Tsoi, and deputy director, Zafar Kamolov, will both serve eight years.

Ponzi

The three men were following a well-trodden path.

Pyramid schemes have taken off in several former Communist countries - including Albania, where a scheme almost bankrupted the country in the late 1990s, and Russia.

Tajikistan map
Pyramid schemes, or Ponzi schemes after their American inventor, involve taking money for non-existent investments with promises of massive returns.

Early investors are paid dividends out of the flow of money from later targets, while the scheme's inventors pocket most of the money.

Anger

In this case, the scheme ensnared mostly women.

Many had mortgaged their houses to raise the money to invest, and some lost thousands.

The scame even drove the Tajik currency, the somoni, higher against the dollar last year as Tajiks liquidated hard-currency savings.

Crowds of angry women surrounded the court ahead of the court decision.

Many blame the government for not warning them about the scam and for refusing to pay state compensation.


SEE ALSO:
Bored students' 130m euro spree
15 Dec 03  |  Business
Britons count high cost of scams
25 Nov 03  |  Business
Tajik jewellery scam trial begins
10 Dec 03  |  Asia-Pacific


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