September 26, 2018, 10:08 pm / Personal account Exclusively by subscription

How thousands of Russians gave money at 600% per annum

The Central Bank spoke about a large-scale financial pyramid Anna Eremina “Cashbury” managed to involve several tens of thousands of people in its “project” / Cashbury

“If you are offered a yield of 30%, then you will doubt it, but if it is 1000%, then you will run [to invest money],” this is how the first deputy chairman of the Central Bank, Sergei Shvetsov, described the secret of the popularity of financial pyramids. On Wednesday, the regulator announced that it had identified “one of the largest financial pyramids” in recent years; it launched its activities in many regions, almost throughout the country. We are talking about a group of companies - Russian and foreign - operating under the Cashbury brand. The regulator complained about their work to the Prosecutor General’s Office and the Ministry of Internal Affairs, according to comments from Valery Lyakh, director of the department for combating unfair practices of the Central Bank. So the Central Bank decided to warn citizens against working with Cashbury - it cannot simply stop the activities of these companies, since they do not have licenses from the Bank of Russia.

“Cashbury” managed to involve several tens of thousands of people in its “project,” Lyakh said, citing expert assessments. “Cashbury” builds its work on the principles of network marketing, promises inflated profitability, and conducts aggressive advertising in the media and social networks, Lyakh listed. All these are clear signs of a classic financial pyramid.

The company’s website says that it offers to invest in issuing microloans to individuals and small businesses, with a promised return of up to 600% per annum. The company raises money in rubles and cryptocurrency, Lyakh knows, but there are no signs of real economic activity.

We learned about Cashbury at the end of 2017; the company had an avalanche-like influx of funds at the beginning of 2018, says Marat Safiulin, manager of the Federal Public Fund for the Protection of the Rights of Depositors and Shareholders. “Cashbury” held public events in the regions, gathering huge halls where up to a thousand people came, he continues. At such events, the company told its “legend” that they could provide returns to “investors” at 200–600% per annum by issuing microloans at 2.2% per day, explains Safiulin. “When we applied for a loan, the Cashbury employees were very surprised. The rate of 2.2% per day is very high, no one will take money that expensive,” he recalls.

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The Cashbury group included two microcredit companies that were on the Central Bank register - Sardonyx and Chrysolite; the regulator excluded them from the register on September 17. These companies did not conduct microfinance activities during the entire period of their existence, a representative of the Central Bank explained.

“Cashbury” attracted people on the principle of network marketing and advertised in federal media, in crowded places, for example in the St. Petersburg metro, says Safiulin, noting that “Cashbury” was also actively present in social networks.

Vedomosti sent a request via Facebook to Artur Vardanyan, who is named on the company’s website as the chairman of the board of the Cashbury group of companies, but he did not respond to it. Vedomosti called one of the phone numbers listed on the Cashbury website. The person who answered the phone called fake news reports that the Central Bank called Cashbury a financial pyramid. He also said that management would record a video explaining what was happening.

Not a single pyramid in Russian history has returned money to participants in full, says Dmitry Gorbunov, partner at the law firm Rustam Kurmaev and Partners. “All investors can only rely on a lucky break, the conscience of the organizers or law enforcement agencies. Otherwise, just admit the loss,” he concluded.

People who invested money in Cashbury can receive partial compensation, explained Irina Mostovaya, a partner at NAFKO-Consultants. Compensation to victims of financial pyramids is paid by the Federal Public Fund for the Protection of the Rights of Depositors and Shareholders. But for this, Cashbury must be recognized as a pyramid and entered into the register of financial pyramids, which does not always happen, Mostovaya says, noting that even if Cashbury is included in the register, compensation will not exceed 25,000 rubles.

To receive compensation, the court must recognize the citizen as a victim, adds Safiulin, and the injured person can receive payment from the fund only once in his life. So far, Cashbury clients have not contacted the fund, this is probably due to the fact that they are waiting for the return of their funds: according to the agreement, the money was raised for 400 days and, since the company only worked for a year, the deadline for their return has not yet arrived, says Safiulin.