On the road to jail? Derek Loom’s Loom Ponzi scheme gains massive popularity in Nigeria

Loom

For many Nigerians who are into Loom Ponzi scheme, they rarely know the man/woman behind the scheme. All they care about is that they are getting paid and the next person(s) is paying for it.

However, we did some digging and we discovered that one Derek Loom was behind the Ponzi scheme that targeted social media users

According to new reports, Derek Loom started the “Blessing Loom” made over 10 million by promising Facebook users $800 if they can refer two other people to the scheme. Along with that, the user needs to deposit $100 from the start all the signs pointed to a classic ponzi scheme.

“Authorities believe Derek Loom started his scheme with a few people who were looking for extra money during the holiday season and were easily tempted by the “Blessing Loom” they jumped on the idea of making extra cash doing nothing after receiving their $800 the scheme blew up and everyone wanted in, but the scheme grew so fast that some of the people scammed wanted to invest $100,000 for a 80% return and that’s when the scam really blew up.
Derek Loom had less money coming in he decide to keep the remaining amount for himself and take a run from it. But Authorities were outside his door.”

News reports confirmed that Derek Loom who has been arrested last week has not been charged but will be tried for running this elaborate scheme.

Like his bigger ‘role models’ Derek’s notorious exploits via his ‘Blessed Loom’ Ponzi scheme is typical of how Internet-driven scams are operated. As it was in the case of MMM Global, the founder, Sergei Mavrodi used the power of social media and administrative decentralization to rapidly grow their user base. Earlier investors are advised to build a team which ends up building more and more teams under a web of pyramid hierarchy.

Unknowing to many Nigerians, Derek Loom’s scam had witnessed massive crackdown from various authorities, particularly in the state of Texas.

“It’s a violation of the postal code, it’s a violation of the United States code. Also, there are banking regulations and tax ramifications for not reporting any money that you’re getting from this,” said Mickey Cargile, President of Cargile Investment Management.

“Texas law states those participating in pyramid schemes can face up to two years in prison and/or a fine up to $10,000.”

Ponzi scheme analysts who monitored the growth and seeming collapse of Loom estimated that more than 15 million investors/victims must have participated in the scheme. With losses already being reported, the value of money lost to the scheme is only left to the imagination.

No one has been able to link Derek Loom and his primary links as the source of the platform to Nigeria. Some of the people who are promoters on the scheme claim they do not know who Derek Loom is, many were even surprised to know that the founder used named the scheme after his surname.

Although no warning has been issued concerning Loom, financial regulators in Nigeria have issued several warnings regarding Ponzi schemes and their damaging effect. There is no guarantee that many people will heed the advice given the desperate financial situations of many young people.