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Pyramid schemes: How they work and who gets hurt

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The Central Bank of Sri Lanka has started a special awareness campaign called “Anti-Pyramid National Awareness Week” from July 14 to 18, 2025. The theme is “Pyramid is a trap – don’t get into the wrong track.” This campaign is meant to warn people about pyramid schemes, which are fake money-making plans that can cause big financial losses. During this week, the Central Bank will reach out to schoolchildren, teachers, police officers, government workers, and the general public through over 6,000 schools and 14,000 local areas across the country. They will explain how these scams work, why they are dangerous, and how to avoid falling into such traps.

While the slogan Pyramid is a trap – don’t get into the wrong track sounds catchy, it raises an important question: How can people avoid a pyramid scheme if they don’t know what one looks like? For many Sri Lankans, especially those without financial education, pyramid schemes are often hidden behind friendly faces, smart-sounding plans, or online platforms that promise easy money.

Therefore, telling people “don’t fall into the trap” is not enough unless they’re clearly taught how to recognise the trap in the first place. Without showing what a pyramid scheme really is, how it works, and what signs to look for, this slogan risks becoming just a rhyme with no real impact.

What Are Pyramid Schemes?

Pyramid schemes are deceptive and fraudulent business models that masquerade as legitimate investment or income-generating opportunities. The people at the top benefit, while those lower down the pyramid inevitably lose money when recruitment stalls.

Figure 1 visually demonstrates how a pyramid scheme rapidly grows unsustainable due to its structure. If each participant must recruit just five new people, the numbers multiply at an exponential rate:

*  Round 1: One person (the original recruiter)

*  Round 2: Five new recruits (total so far: six)

*  Round 3: 25 new recruits (each of the five recruits five more)

*  Round 4: 125 new recruits

*  … and so on.

By Round 14, the calculation goes: 5^14* 6,103,515,625

That’s over sixbillion people, close to the entire world’s population. This mathematical reality highlights why all pyramid schemes must collapse: they require ever-increasing numbers of new recruits, quickly exceeding the number of people available—even if everyone on earth participated. This makes them fundamentally unsustainable and ensures that the vast majority at the lower levels will inevitably lose all their money. (See Figure 01)

How Do They Fool People?

Pyramid schemes are often cleverly disguised. They wear many masks: “investment clubs, High-yield “opportunities,” Multi-level or network marketing and “passive income,” etc.

In 2003, I was approached by a well-known banker and the dean of a leading state university’s Faculty of Commerce, both of whom attempted to pitch the notorious Gold Coin pyramid scheme to me. During one of their public presentations, I intervened by illustrating the scheme’s unsustainable mathematics—demonstrating the inevitable collapse of the scheme to the audience helping many people avoid falling victim to the Gold Coin scam.

Look Out for These Red Flags:

To protect oneself, it’s important to recognise the common warning signs:

*  Guaranteed high returns with little or no risk

*  Profits dependent on recruitment rather than product sales

*  Upfront fees or starter kits required for participation

*  No actual product or service of value being sold

These red flags are almost always present in fraudulent schemes and should trigger immediate caution.

Lessons from History: Big Schemes, Big Losses

History offers painful lessons about the damage pyramid and Ponzi schemes can inflict:

Charles Ponzi (USA, 1920): Promised 50% returns in 45 days, resulting in $20 million in losses and a public panic.

*  Albania (1997): Two-thirds of the population invested in pyramid schemes; their collapse wiped out half of the country’s GDP and sparked riots that left over 2,000 dead or injured.

*  Russia’s MMM (1990s): A pyramid scheme defrauded 10 million people, siphoning over $10 billion in public funds during a time of economic transition and weak governance.

*  Bernie Madoff (USA, 2008): Orchestrated a $65 billion Ponzi scheme, highlighting deep flaws in financial oversight.

*  Crypto-era schemes (2010s–2020s): Digital scams like OneCoin and BitConnect lured investors worldwide by misusing blockchain terminology. OneCoin alone defrauded people of more than $4 billion globally.

These cases show that pyramid schemes adapt to their cultural and technological context, making them hard to detect and resist.

Sri Lanka’s Experience and Response

In recent years, Sri Lanka has witnessed a rise in fraudulent pyramid schemes, especially those facilitated through digital platforms. With the economic challenges faced by many Sri Lankans, the appeal of fast money has grown stronger, creating fertile ground for these scams.

What Has CBSL Done?

The Central Bank of Sri Lanka (CBSL) has taken several important steps:

Legal action: Section 83C of the Banking Act makes it illegal to operate, promote, or recruit for pyramid schemes. CBSL has investigated and taken action against several such operations.

*  Awareness campaigns: In 2025, CBSL organised the National Anti-Pyramid Awareness Week, reaching over 50,000 people through 700+ educational events across schools, government offices, and local communities.

*  Media strategy: CBSL has used television, radio, social media, and print advertisements to educate the public about the dangers of pyramid schemes.

*  Partnerships: Engaged schools, the Tri-Forces, police, and civil organisations to spread the message widely.

These actions represent a significant institutional effort to combat financial fraud and protect vulnerable groups.

Where the Fight Falls Short: A Critical Review

While CBSL’s efforts are commendable, a critical look reveals areas for improvement:

Weak messaging: The slogan “Pyramid is a trap – don’t get into the wrong track” lacks emotional impact and clarity. It sounds more like a rhyme than a serious warning. Stronger, context-specific messages are needed.

*  Lack of digital outreach: Pyramid schemes today often operate through encrypted messaging apps, fake crypto platforms, or “get-rich-quick” online influencers. CBSL’s campaigns focus heavily on traditional media and may not effectively reach digital-first audiences.

*  Absence of real-time reporting tools: Victims have no direct hotline or mobile app to report suspicious schemes. Quick reporting and verification can prevent further spread.

*  Limited transparency: While CBSL investigates and prosecutes schemes, the public rarely hears about the outcomes. A lack of updates weakens deterrence and reduces public trust.

*  Insufficient victim support: There is little visible effort to provide financial counselling or psychological support to those who’ve lost money, further stigmatising victims and allowing fraud to flourish in silence. (See Figure 02)

Simple Checklist: How to Protect Yourself

Before investing in or joining any programme ask yourself:

Do I have to pay to join?

Do I earn money mainly by recruiting others?

Is there no real product or service involved?

Is the company unregistered or unregulated?

If you answer yes to two or more of these, walk away—and report it! (See Figure 2).

Moving Forward: How to Beat the Scammers

Sri Lanka’s long-term success in combating pyramid schemes depends on modernising its strategy:

Create better awareness tools: Short animations, radio dramas, local-language leaflets, and testimonial videos from victims can resonate more than technical explanations.

*  Target digital scams: Training programmes for digital literacy and scam recognition should be rolled out in partnership with universities and telecom providers.

*  Establish reporting infrastructure: A national hotline, mobile app, and web portal for submitting complaints should be introduced. Anonymous tips could also help.

*  Enforce with transparency: Regular public reports on investigations, legal outcomes, and recovered funds will show that justice is being served.

*  Empower schools and youth: Make financial literacy part of the curriculum from secondary school onwards. Young people are frequent digital users and vulnerable to online scams.

Pyramid schemes thrive where there is ignorance, desperation, and misplaced trust. While the Central Bank of Sri Lanka has taken commendable steps to address this growing threat, a more aggressive, digitally-savvy, and emotionally resonant approach is necessary. Public education must move beyond slogans to build resilience, foster skepticism, and offer real-time protection tools.

Ultimately, the best defence lies with informed individuals. If something promises extraordinary returns with little effort, it’s almost always a scam. Ask questions. Think critically. And when in doubt—walk away, report, and protect your community.

(The writer, a senior Chartered Accountant and professional banker, is Professor at SLIIT, Malabe. The views and opinions expressed in this article are personal.)



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BRICS upholds inclusive growth; re-affirms South-South cooperation

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BRICS political leaders at the 2026 New Delhi summit.(BBC)

A principal highlight of the recently concluded BRICS 2026 summit in New Delhi was the grouping’s unambiguous championing of the empowerment of ordinary people everywhere. This was yet another notable coming together of Southern governments over matters of common concern alright but it was the grouping’s people-oriented thinking that struck the impartial commentator as particularly important this time around.

The latter accent merits underscoring in view of the widespread perception that Southern oriented international organizations, such as the Non-aligned Movement (NAM), have had their day, so to speak. However the BRICS summit not only re-affirmed NAM principles but gave proof of its willingness to complement the main undertakings of NAM. Accordingly, causes such as South-South cooperation, international economic and social equity, multilateralism, international peace and the need to uphold the current UN-centred world order received resounding and fresh emphasis.

Particularly encouraging for those espousing Southern development concerns was the stressing of the historic ‘Bandung Principles’ in the New Delhi Declaration which crowned the summit deliberations. As is known, it was the ‘Bandung Spirit’ of 1955 that paved the way for the establishment of NAM and South-South cooperation in a major way. As such the ‘Spirit’ was primary in helping to reshape international development discourse and in giving it a pro-people bent. That is, development correctly conceived was birthed.

The New Delhi Declaration said in this regard: ‘We recall the 1955 Asian-African Conference in Bandung, Indonesia that proclaimed general principles, including equality, independence, non-intervention and mutual benefit. We stress that the Bandung Spirit serves as a reference in the pursuit of a fairer, more inclusive, and representative multilateral system.’

‘Geopolitics’ was not glossed over or ignored in New Delhi, but it is quite forgotten by some sections of opinion in particularly Sri Lanka that BRICS, while being an important Southern counter-balance in terms of power to the global North is also essentially about international economic growth with equity. The New Delhi summit helped to put right this conceptual imbalance in what groupings such as BRICS ought to be thinking and doing.

Even more precisely, people should be at the heart of development and in the exertions and preoccupations of international organizations claiming to represent the South. Southern governments equipped with economic and military might in particular remain important but it is people’s empowerment that ought to be the overriding consideration.

The latter concerns help stress the cruciality of democratic development since it is the latter that facilitates best the well being of people. Unfortunately, BRICS happens to be top-heavy with authoritarian governments that could deliver economic growth but not equity. It is fully representative, participatory governance that could best deliver to the people their essential needs and not totalitarian governments.

This is a complex dilemma for BRICS. It could be resolved somewhat by admitting more and more pro-people, democratic states into the BRICS fold to counter-balance the power and influence of authoritarian states. At present among the principal BRICS countries it’s only India that meets most of the criteria for democratic development.

Hopefully, more and more Southern democracies would see it fit to join BRICS in consideration of the latter’s potential to be a prime ‘economic powerhouse’ of the world. Equally hopefully, people’s empowerment in the true sense would come to be valued as a crucial merit for BRICS membership. It is relevant to stress that the fulfillment of the fundamental rights of a people is integral to their complete empowerment.

A grave negative fallout from the Trump administration’s current militarism is that more and more states world wide would come to value military heft over people’s empowerment. Consequently, the preference for military power could lead to countries wanting BRICS membership for the wrong reasons. That is, security through collective armed might would come to matter over all else and the world would be rendered an increasingly ‘dangerous place’.

But thinking people would expect from BRICS a more responsible role in world affairs and prefer to have from it inspirational guidance in democratic development, correctly understood.

A commitment by BRICS at the summit of considerable importance to world peace that should not be underplayed is its commitment to the UN system and the strengthening of International Law. The relevant quote from the Declaration spoke of BRICS’ ‘Commitment to strengthening multilateralism and multi-polarity and upholding International Law, including the Purposes and Principles of the Charter of the United Nations.’

Coming at a time when the UN is seen by some as a spent force, lacking effectiveness, the above endorsement of the UN Charter and International Law is of crucial significance. This amounts to solidly upholding the post World War Two order despite current largely rhetorical assertions that it is fast unraveling.

While UN reform remains a compelling necessity, the endorsement of the UN-centred order holds out the possibility of some of the BRICS heavyweights, who are currently acting in violation of International Law, eventually getting back to conduct that would be more in keeping with the requirements of International Law.

The UN could put these developments to constructive use by redoubling its efforts to work out diplomatic solutions to the current conflicts and wars that are showing no signs of being receptive to fresh peace efforts.

Two of these theatres of conflict are the Middle East and the Ukraine. While the US, Israel, Russia and Iran would need to be engaged by the UN with exceptional persuasive power to sort out the conflicts where they have come to feature directly and indirectly, the relevant BRICS members’ commitments to world peace and multilateralism could be used as instruments of moral pressure perhaps to induce them to get onto the path of peaceful conflict resolution.

The wide consensus among the BRICS powers amounts to their scoring a significant political victory over the US and its allies. Their espousal of international peace and the UN Charter exposes the US as being at cross purposes with peace-oriented and democratic sections world wide. Specifically, the moral and intellectual poverty of the Trump administration is being revealed glaringly.

This does not amount to a condemnation of the people of the US perse. It is just that some of them have voted quite unwisely. As a first step towards correcting this situation they could make good use of the upcoming mid term elections to register their strong disapproval of the Trump administration and the political extremists among the US Right. Course correction is not impossible.

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Not I — We: A new uniform will mean nothing if the person inside it is left behind

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by Mahil Dole

Senior Superintendent of Police (Retd.)

Sri Lanka Police has just marked 160 years. The parades were in order. The sentence that should have followed them has not been written with enough force. A police service that is pulled by politics, rewarded for individual glory and tried every night on social media cannot protect a country that is now a maritime hinge for international narcotics and financial crime. The political authority must decide, not in a speech, but in conduct, whether this force belongs to the law or to the loudest faction of the week.

That is not a plea. It is a warning.

The political hierarchy and the police hierarchy now agree that the service needs a new outlook, beginning with the uniform. The cut and the kit are not yet settled. That conversation is overdue. Criminals have moved into containers, encrypted apps and international logistics. An officer equipped for a quieter decade is less able to detect, and less able to come home.

Sophistication of kit is essential. Body-worn cameras, communications and protective equipment that match the threat are not luxuries. They keep a policeman alive.

If the first decision of this compact is only what the officer will wear, the wrapping will be modern and the person untouched. The priority is not a new silhouette. It is a different person inside the uniform.

The officer is a human being

He and she is a product of this complicated society. The fractures that run through the village, the school and the social-media feed run through the recruit. Communal suspicion, religious identity and ethnic memory are not checked at the armoury gate. The question treated as delicate is operational: is this officer mentally geared for ordinary crime and for communal, religious and ethnic conflict?

What is his stand if he belongs to one community and is sent into a dispute involving another? How will the parties look at him? How will the media frame the first photograph? That decides whether a crowd sees the law or “the other side.” We are all Sri Lankans. The sentence is easy on a Police Day banner. It is hard at a junction when rumour is already ahead of the patrol.

Every officer, from constable to gazetted rank, must be trained for these issues as deliberately as for a baton. Not one lecture at Katukurunda: recurring, scenario-based work on mixed neighbourhoods, mixed complainants, and keeping personal faith out of the method of work. The media will hunt the communal angle; parties to a conflict will hunt the ethnic one. The only answer that holds is an officer whose first identity on duty is Sri Lankan and whose first loyalty is the law.

That is “We.” Assuming the uniform dissolves identity is how a single incident becomes a national story.

What they have been is not what they can remain

From the 1866 ordinance this service has been the state’s civilian arm, colonial order-keeping, post-independence law and order, then a wartime partner that buried its dead beside the armed forces. Specialised units were built for terrorism, organised crime and financial intelligence. The same institution was used as a residual army, a political instrument and a promotion marketplace. Loyalty too often attached to a person, not to the law. Easter Sunday made the price visible. So did every file that moved, or stalled, according to who was in office.

A history of sacrifice does not excuse a present of capture. It makes the capture more shameful.

What they are today

On paper the force is large, some 79,000 authorised, 609 stations. On the ground it is thin. More than 4,300 officers have left since 2020. Vacancies exceed 30,000. Shifts of twelve to eighteen hours are still treated as normal. Distress is still logged as discipline rather than welfare. That is waste, not toughness.

Crime has two faces, and both strike national security. Gang violence over narcotics still produces shootings. Sri Lanka also sits on feeder routes moving Afghan and Pakistani product toward other markets. Harbour and high-sea detections in the hundreds of kilograms are no longer rare. Ice hidden in towels at Colombo Port; heroin pulled from multi-day trawlers; scam compounds and frozen assets in the billions of rupees, these are not “ordinary crime.” They buy influence and fund the next consignment.

The third battlefield is information. Reels and anonymous accounts impersonate officers, launder rumour as fact, and reward the man who seeks a following. Inside the service the culture still teaches “I”: my file, my photograph, my briefing. Rank is being treated as a prize. It is a trust.

The container that became a campaign

Late August 2026, officers opened containers at the Colombo International Container Terminal and recovered some 463 to 472 kilograms of crystal methamphetamine, concealed in towels, originating from Pakistan and valued in the billions of rupees. Suspects including foreign nationals were arrested. The United States DEA publicly associated itself with the intelligence. The criminal case sits with the Central Crime Investigation Bureau.

That is a success. It should have been protected as a success.

Instead, an internal process review, ordered by the Inspector General into how information moved between bureaux, was translated on social media into another story: that the IGP and Senior DIG Ranmal Kodituwakku were being “chambered” over the detection. An Opposition MP warned, correctly, that putting the officers who delivered the raid under a public microscope will teach the service the wrong lesson.

State the distinction without apology. A criminal file is about the network and the money. A process file is about timelines and chain of custody. A blog is neither. Collapsing a Senior DIG’s recorded statement into “the hierarchy is in the dock” is not accountability. It is a gift to those who packed the towels. After a half-tonne interdiction, a process review is normal; leaking it as a morality play is not. Complete the inquiry on the record. If negligence is found, deal with it. If not, say so. Half-spoken files let rumour colonise the institution.

Training, technology and a mind that can bear the load

The IGP and the hierarchy must stop treating training as a calendar ornament. Immediate programmes are required, not next year’s paper.

First

, the evolving issues: communal and religious tension, narrative operations, child and women protection, financial and cyber crime, harbour interdiction, the law of arrest.

Second

, the technologies: digital evidence, data protection under the Personal Data Protection Act, disciplined open-source work, body-worn cameras that protect the public and officers alike.

Third

, mental health as operational infrastructure, counselling an Inspector can use without becoming a Legal Division case, and early recognition of burnout before it becomes a headline.

Incentives must follow: allowances for certified competencies, promotion credit for courses applied, not for attendance photographs. Asking for sophistication at the port with no path to acquire it is theatre.

A new uniform that can carry a camera, worn by an officer unprepared for the society he polices, is a costume. The station, the cell, the unseen hour Look next at where this officer lives and works. Many stations are old, congested and unhygienic. Living standards on duty are low. You cannot demand a different person in the uniform and house him as if he were expendable.

Cells are a particular failure of command. Too many sit out of sight of the men on duty. They are dilapidated. What happens inside goes unnoticed until a death, an assault or an escape. That is a design of our own buildings, not a secret of the underworld. A cell that cannot be seen cannot be defended in court or in conscience. Refurbish, fix sightlines, monitor what the Constitution requires, and treat an escape as a failure of supervision before it becomes a press note.

These are not welfare extras. They are the conditions under which evidence is kept, suspects are held, and officers decide whether the job is still worth the family cost.

The health of the officer is the health of the public

One of the first duties of the hierarchy is the health of the policeman and his family. A sick officer with a sick child is not “uncommitted.” He is a risk to himself, to the next raid, and to the citizen at the counter. Police hospitals are few. Officers in rural stations cannot reach them in time. The IGP should not wait for a building programme. Speak to the health authorities now. Arrange priority access for officers and their families at government hospitals. Dedicated wards or reserved beds are not a privilege class. They are the minimum owed to people sent into harm, and into other people’s crises, at every hour.

Good health is a good mind. A good mind is good care for the people. No uniform compensates for an officer who has not slept, has not been treated, and cannot reach a Police hospital.

What they must be tomorrow

The country does not need more decoration. It needs a service the public can approach without fear and that no politician can casually redirect: intelligence-led against networks that threaten the state; digitally capable and legally bounded; trained for communal heat as well as narcotics; housed and treated as human beings; collectively minded. We hold the ground, not I cleared the file.

The constable at the junction and the analyst tracing a hawala chain are the same institution. National security is not a specialist’s private property.

To the policymakers and the political authority

You have agreed with the Police hierarchy on a new outlook. Use it for more than cloth.

Independence is not the IGP’s personal autonomy. It is the institution’s ability to apply the law without fear or favour, and still answer to the law. You cannot have that and also have a Police summoned, transferred or publicly undermined according to the needs of the week.

Appointment and removal of the Inspector General must remain a process, not patronage. The National Police Commission must exercise its powers over promotions, transfers and discipline without being hectored from the gallery. Cabinet sets policy and budget. It does not choose Tuesday’s suspect. Comment from the House on the guilt of named officers while a file is open is not oversight. It is interference under another name.

If you want an apolitical Police, stop using internal inquiry as a factional weapon and social media as a substitute bench. Different treatment of files is the old disease. Naming it only when the officer is someone you dislike is the same disease.

Then fund what a new uniform implies: immediate training, habitable stations, cells that can be seen, and a health arrangement with the Ministry of Health that does not leave a rural sergeant’s family outside the gate. Announcing kit and withholding living conditions is not reform. It is dressing the service for a photograph.

The public has a part. Distinguish error from crime. Cooperate with the officer who is fair; demand consequences where he is not. In conflict, look at the uniform as the law, not as a census of name, faith or village. Do not outsource judgement to an anonymous account.

The stand It is not I. It should be We.

A new uniform will not make an officer Sri Lankan. Training, health, housing, an apolitical file, and a command that treats him as a human being might. A service that thinks in individual glory will be outrun by networks that think in systems. A political class that thinks in capture will keep receiving detections and wondering why the pipeline never closes. A country that argues about the cloth while the person inside it is exhausted, untrained for communal fire, and unseen in a dilapidated cell block is not preparing for tomorrow. It is rearranging the wardrobe.

The law cannot serve two masters. Neither can the uniform, old or new.

(This analysis is offered in the interest of national security, institutional reform, and public safety)

Mahil Dole, SSP (Retd.), served as Deputy Director in charge of the Counter-Terrorism Desk of the State Intelligence Service and later as Intelligence Coordinator to the Inspector General of Police. He is a former Member of the Sri Lanka Wakfs Board and author of Security Beyond Enforcement: Practical Approaches for a Safer Nation. Email – mahildole54@gmail.com

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The Miss World 2026 scene …

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History was made under the lights on 05th September, as Joheirry Mola Dominguez, of the Dominican Republic, was crowned Miss World 2026 by outgoing queen Suchata Chuangsri of Thailand at April 2nd Square in Nha Trang, Vietnam.

It is only the second Miss World title for the Dominican Republic; 44 years after Mariasela Álvarez’s win in 1982. Reports described it as an “emotional and historic moment” for the nation.

Joheirry, 24, beat 110 other delegates to take the crown.

A dedicated educator and community advocate, she holds a degree in Business Management and Administration from Universidad Iberoamericana. She is Founder and President of “Voices of Tomorrow”, an initiative expanding access to English education for children in vulnerable communities. She also teaches Literature and Social Studies in English, and works as a correspondent for Univision New York’s Ventana a Quisqueya.

Her advocacy won hearts

It was her advocacy that won hearts.

“My Beauty With a Purpose is to take English programmes to kids in vulnerable communities,”

she said at the Grand Final. “Because I believe that when they know this language, the opportunities, the doors that can open to their life, it’s huge. English is a tool that will stay with them and benefit them for the rest of their lives.”

Spain’s Elisabeth Reynés finished 1st Runner-Up, while Malaysia’s Taanusiya Chetty, also winner of Beauty With a Purpose, took 2nd Runner-Up.

The Top 6 included Vietnam’s Le Nguyen Bao Ngoc, Eritrea’s Snit Habteab, and South Africa’s Romanda Hombir.

The 75th Anniversary edition, hosted for the first time in Vietnam, was a spectacle before 20,000 spectators. Staged on a 110+ meter outdoor platform by Nha Trang beach, the square was lit up with huge LED screens and high-power sound.

Even heavy rain during the Americas & Caribbean segment couldn’t dampen spirits. Umbrellas and raincoats popped up and the show resumed 15 minutes later. Nobody left. That’s dedication.

With 111 ambassadors, cultural dances, ao dai performances, and the seaside backdrop, officials called it a celebration of beauty, talent, confidence, and social responsibility.

With 20,000 people, rain or shine, screaming, cheering, live-streaming, waving flags… it was, indeed, pure Miss World magic.

For Sri Lanka, Prathibha Liyanaarachchi did not make the Top 40 at the 73rd Miss World Festival, but she reached the finalist stages of four fast-track events — Top Model, Talent, Sports, and Beauty With a Purpose.

Miss World magic: The square was lit up with huge LED screens and high-power sound

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