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GoldQuest Pyramid scam/fraud

By: | Apr 29, 2004 03:55 PM
(Updated Apr 27, 2006 10:10 PM)

GoldQuest International Ltd. claims to be a mail order retail company. In reality it is a very steep pyramid organization.

What does GoldQuest sell? This is what their presentation says, ??In quest for the best product, the company chose to retail the One Ounce American gold coin, the One Ounce Canadian Maple Leaf gold coin, the One Ounce Australian Nugget gold coin, and a selection of gold coin jewelries. Why gold coins? Gold has a universal market appeal; an excellent investment because of its intrinsic value, a hedge against inflation, devaluation or economic down-trend, very easy to buy or sell (a case of liquidity).??

Sounds great. For centuries people have been working and fighting to accumulate gold.

Hold your horses. How much will you have to pay for your gold coin? $700 + $30 shipping and insurance. However, you don?t have to pay $700 upfront, GoldQuest will let you have your gold coin and your Tracking Center Registration for only $300 + $30 shipping and insurance! Nice guys!

Don?t be naive. Have you bothered to check how much one ounce of gold is worth. It is about US$270 and the trend is downward. GoldQuest is definitely not the place to buy

your gold coins.

GoldQuest proponents will be a little embarrased to admit that they were a little bit dishonest in selling you a $270 gold coin for $700. But they have been well-trained to hype the business.

They will move on to tell you that your $700 is not just buying you a coin, but it is setting you up in business. Your GoldQuest pyramid starts with you as a TCO (Tracking Center Owner). You start by persuading two people to buy gold coins. Each of these people, in turn, should each persuade two other people to buy gold coins. As the referrals grow downward you earn $400 for every five sales on the right and five sales on the left of your tree. Those under you will also eventually earn $400 for every five referrals on the right and five referrals on the left of their own trees below you.

In typical pyramid fashion the guys on top of the pyramid get rich and enjoy life. But where does the money come to pay your commissions? It does not come from GoldQuest . There is no perpetual motion machine. The money comes from the lowest three layers of the pyramid.

For you to earn your first $400, at least eleven people (five on the right and five on the left and you) have to invest or commit $730 to buy gold coins - a revenue of $8,030 for GoldQuest in exchange for about $3,000 worth of coins, freight and commission. A neat profit of $3,600. If the pyramid stops growing we have ten people holding on to $2,700 worth of gold but who have paid $7,000. A clear loss of $43,000.

If you can complete a five-level pyramid there will be 63 gold buyers in your group and you?ll receive $2,400 in commission. The two guys under you will get $1,200 each. And four would get $400 each. But a total of 63 gold coins would have been sold at $45,990. If the pyramid stopped growing, 56 people would be stuck with gold worth $270 each after having paid $730 each and would not have gotten a single cent in commission.

GoldQuest revenues from your pyramid add up to $45,990; its cost of commission is $6,400; cost of coins and freight $18,900. That?s $20,690 profit and contribution to overhead.

If GoldQuest , through its Indian marketing activities, is able to build a thousand five-level pyramids, Inda will suffer a dollar outflow of $45,900,000! GoldQuest would have about $20,690,000 in profits and contribution to overhead.

About 1,000 greedy Indian could have earned $2,400 on a $730 investment. Another 2,000 could have earned $1,200 on a $700 investment each. Another 4,000 would have earned $400 each on an investment of $730. Still a negative situation.

But about 56,000 poor Indians would be stuck with $270 worth of gold for $730 of their hard-earned money.

Is that an excellent investment? A hedge against inflation? Earning dollars for the country?

As a Rotarian I urge you to apply the Four Way Test to the GoldQuest scheme:

Is is the truth?

It is fair to all concerned?

Will it be beneficial to all concerned?

Will it build goodwill and better friendship?

Ask the thousands who will be stuck with gold coins worth much less than what they paid for.


Follow up post 25-4-2005

GoldQuest products are collectors items and will show rapid price appreciation.

Or so they told their unfortunate victims, claiming 30% or more appreciation for their Princess Diana ??Coin??

The truth, as it is often happens, appears rather less palatable, as an advertisement on ebay testifies.

??Goldquest gentlemens numismatic watch w/ leather box. Worth P34,000.00. Will sacrifice sale for P23,000.00. Will ship in philippines??.

The buyer was trying to sell it for 30% LESS than he paid for it. However, to be doubly certain of a sale, the starting price on the auction was set at P19,500, a little more than half its purchase price.

The valuable ?numismatic watch? received no bids.




Follow up post 13th May 2005

GoldQuest to Pay Compensation for fraudulent activities

TEHRAN, Oct. 26--Judiciary Spokesman Jamal Karimi-Rad said Wednesday the Hong Kong-based GoldQuest company has agreed to pay compensations to the government and the people, ISNA reported.

Karimi-Rad added that the company, which has representatives in Iran, has agreed to compensate following the measures of judiciary, which labeled their activities ?fraudulent?.

Asked if any organization had authorized the company to print coins with Imam Khomeini?s picture on it, Karimi-Rad said the company has not received any authorization and the Center for Publishing Imam?s Works has filed a complaint.

The company offered gold coins and other valuable items via the net, promising the buyers hefty profits in a short period. The government announced that their activities were damaging the economy by causing an outflow of capital.

Subsequently, the judiciary launched an investigation into the case, saying their activities were illegal. Later, a group carrying coins into the country was arrested upon arrival and the coins were found to be counterfeit.




Update Goldquest banned In Sri Lanka

GoldQuest is now illegal in Sri Lanka after its scam drained US$ 15 million in foreign exchange from the country, the Central Bank said Friday.

The Central Bank rushed through amendments to the Banking Act, banning pyramid style schemes, but not before few thousand people parted with their cash.

??It is illegal,?? Central Bank?s Director Banking Supervision Joan de Zilva said, responding to questions from journalists whether Goldquest was now illegal after the conclusion of a SAARCFinance seminar on pyramiding. ??Under the Banking Amendment Act is it illegal.??

Pyramid schemes are banned in many countries but their proliferation in Sri Lanka alarmed President Chandrika Kumaratunga, bankers and regulatory authorities, which fear the public may be duped into investing money in such scams in the absence of laws to prevent them.

Central Bank says it has also banned banks from facilitating GoldQuest transactions.

??Our vigilance over this has resulted in not a single bank engaging in these transactions today,?? says de Zilva.

Full story at


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