[Pyramid Image: Studybreaks.com]

by Howard Haykin

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.

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.