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This ‘Cashback Membership’ Was a Ponzi Fraud

October 22, 2019

[Pyramid Image:]



by Howard Haykin



WELCOME SHOPPERS.    In exchange for a monthly fee of $125, “Saivian” Cashback Members (Investors) were promised a 20% cash rebate on their shopping purchases. All they had to do was submit their sales (“POS”) receipts. Saivian, in turn, said it would sell the information on those receipts to 3rd party vendors, generating the funds needed to cover its cashback payments to members.
Unfortunately, Saivian was a multimillion-dollar Ponzi and pyramid scheme.



According to the Securities and Exchange Commission (the “SEC”), Saivian did not generate any revenue from sales to third parties. Instead, the only revenue that Saivian generated came almost exclusively from the $125/month membership fees collected from Cashback Members.


  • Like a classic Ponzi scheme, …, Saivian paid the 20% rebates to some investors with funds generated through the investments of other investors - and not from any legitimate commercial activity.


  • Saivian was also a pyramid scheme … in that it required the constant influx of new investors to remain solvent. In order to keep the scheme afloat, the company urged Cashback Members to become “Affiliates” by selling Saivian Cashback Memberships to others.


PONZI SCHEME:  a form of fraud in which belief in the success of a nonexistent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors.
PYRAMID SCHEME:  a form of investment (illegal in the US and elsewhere) in which each paying participant recruits 2 further participants, with returns being given to early participants using money contributed by later ones. Pyramid schemes are illegal when they " purport to sell a product, but they simply use the product to hide their pyramid structure."


Eventually, the fraud collapsed when Saivian could no longer afford the lavish lifestyle of its executives nor pay out cash rebates to all its members.



INVESTOR TAKE AWAYS.     As a rule, STEER CLEAR OF deals that promise to pay out 20¢ on the dollar - they're suspect. But if you're keen on investing, seek our a trusted individual for a 2nd, unbiased opinion - even if the deal seems relatively small. If and when the deal goes bad, you're likely headed for a huge headache.