Live from the Woods: Menzgold customers not motivated by greed but curiosity

If the movement of ants could stun a child, then adults – educated and uneducated, could be gullible to shell out their cash for a piece of a scam.

Psychologists have gotten a handle of the two scenarios and classified them as aspects of the same pie – curiosity. The source of this drive, which has the sting of hunger or thirst, has confounded science for some time. While the drive theorists believe curiosity originates within us, the incongruity theorists claim it is motivated when one is presented with a challenge that doesn’t fit into the order of things in the world.

Despite the trouble in fully explaining curiosity, one thing is clear that it is an urge that must be satisfied at whatever cost, much like we do to hunger by eating.

It is normal to get curious when a company offers something more than simple interests to its investors. And this curiosity is aroused more particularly because the status quo could hardly afford us a decent interest on our principal. So once you are promised a percentage of your capital at the end of every month for a particular period, you are seized with curiosity to take the risk to satisfy that urge.


This was the situation customers of gold dealership firm, Menzgold Ghana Limited, found themselves. I have heard some so-called financial analysts ascribe greed as the motive why those customers would invest with the company.

Well, however independent their comment may sound, I disagree with the conclusion. I think it is yet another simplistic way of addressing a complex issue that our nation has to grapple with over the past three years.

The customers of Menzgold, mostly educated, and supposedly financially savvy, were not motivated by greed. Far from it. They were after the miracle that curiosity offers to those who would follow their drive. You give away your money to a company that promises an unbelievable interest because you want to experience the miracle promised. You first ask yourself one of these questions: Is this possible? How is it possible?

The moment you attempt to answer any of the questions, however false conclusion you draw, you automatically become an investor. This is the curiosity theory.

I am asked: How could high-flying, respected professionals and streetwise investors fall prey to a scam? And I often reply: You mean like voting for a particular candidate on Election Day because of his pretentious promises? However one looks at the election analogy, once the elements of deception are present, it is nothing short of a scam.

It has been said that the more things change, the more they remain the same. Since the 1920s, the days of Charles Ponzi, the man for whom the scheme is named, to date, nothing has really changed. Else, Bernard Madoff, a major Ponzi schemer, would not have conned investors out of over $65billion over a thirty year period until he was exposed in December 2008. Madoff was a respected financial expert whose customers were mostly well educated.

Truth is, anyone can be taken in by such old ploy. Once your curiosity is provoked and you are shoved to the tip of the cliff by juicy offers – come on – you may go for the kill.

In explaining why people are drawn to Ponzi schemes, Stephen Greenspan in 2009 came up with the theory of gullibility. He saw gullibility as a subtype of foolishness and concluded a foolish act happens when “someone goes ahead with a socially or physically risky behaviour in spite of danger signs, or unresolved questions which should have been a source of concern for the actor.”

Greenspan identified four factors that he believes explain the success of Ponzi schemes. These are; situation (challenge presented to investors whether or not to invest in a foolish act); cognition (lack of clarity of thought); personality (trusting the story of a colleague investor); and emotion (strong desire to increase one’s wealth).

Also, Robert Cialdini in 2001 wrote extensively on how one’s behaviour is greatly affected by the influence and persuasion of others to subscribe to Ponzi schemes. He explained how intelligent people are sometimes persuaded into less intelligent ventures. Cialdini identified five principles that explain the confusion of many Ghanaians today – why are professionals falling prey to Ponzi schemes. The principles include; (a) reciprocation – returning a friend’s favour; (b) commitment and consistency – the need to stay true to one’s promise; (c) social proof – we tend to follow what others we trust have done; (d) authority – we listen more to authority figures; and (e) Liking – we are often persuaded by people we like.

But the common strand that runs through both Greenspan’s gullibility theory and Cialdini’s principles of influence is blind obedience – that inherent quality of curiosity. We uncritically follow anything – it doesn’t matter what it is – that tends to hold our interest.

Let me concede that curiosity sometimes breeds greed but not the kind alluded to by the so-called social commentators and financial gurus.

There is the need also to dispel the confusion over whether or not the business of Menzgold Ghana Limited should be regulated by the Bank of Ghana (BoG) or Securities and Exchange Commission (SEC). There are others too who think there is no legal regime regulating the nature of Menzgold’s business. But I want to submit that the Securities Industry Act 2016 and its predecessors contemplated the nature of Menzgold’s business. What the gold dealership firm is engaged in is nothing short of offering investment contracts to its investors as was established in Sec v. W. J. Howey.

In that case, the respondent corporations, W. J. Howey Company and Howey-in-the-Hills Service Inc., had a chain of businesses similar to that of Menzgold. Howey Company owned large tracts of citrus acreage and planted about 500 acres annually. It kept half of the groves and offered the other half to the public to raise “additional funds for development.” Each prospective customer was offered a sales contract by Howey Company but he had to enter into a service contract with Howey-in-the-Hills Service Inc., a service company that was into cultivating and developing the groves, including harvesting and marketing of the crops. To reap more profit from one’s investment, the investor had no option than to employ the services of Howey-in-the-Hills Service Inc. The companies’ client base grew but the (United States) Securities and Exchange Commission brought an action to restrain the respondents for selling unregistered and non-exempt securities. The question presented to the court was whether or not the business of the respondents should come under SEC. But the court had no difficulty in holding that to the extent that the transactions of the respondents clearly involve an investment contract they are to be regulated by the Securities Act.

An investment contract has been explained as “the placing of capital or laying out of money in a way intended to secure income or profit from its employment.” State v. Gopher Tire & Rubber Co., 146 Minn. 52, 56, 177 N.W. 937, 938.

For a company to be seen as offering investment contracts to its customers, three basic elements must be established that;

(a) The company involved has offered something more than simple interests to investors;

(b) It has provided an opportunity for money to be contributed; and

(c) It has promised to share profit with its contributors.

In the Menzgold case, all the elements of a profit-seeking business venture are present. It is clear that the gold dealership is offering investment contracts to its investors.

There is no denying that the investors have provided the capital and been promised share in the earnings and profits of the company. This type of business should not confuse anyone. The Securities Industry Act which created the Securities and Exchange Commission contemplated this business.

But the unasked question is: would the Menzgold experience bring about the end of Ponzi schemes in Ghana? My response is: Did the DKM and God is Love saga drive away Ponzi schemers from the society?

Well, James Walsh believes the world has not seen the end of Ponzi schemers. Perhaps, your friend is one of them. Walsh noted the remarkable thing about Ponzi’s legacy is that, no matter how many times investors lose money, new schemes keep coming forward. And greedy, naïve people (I will add curious people) of all sorts line up to throw good money after bad.

How sure are you that your other investment is not another Ponzi scheme?


About Author:

Kwabena Brakopowers is a journalist, novelist, and essayist whose works focus on politics, migration, social situation, economic and environmental issues. He spends his time writing either in Accra or Monrovia, where he calls his second home. He could be reached at or visit to read about him

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