BBOM assets frozen, Judge agrees it’s a Ponzi
A day after I reviewed BBOM, Federal Police in the Brazilian state of Pernambuco announced that they had launched an investigation into the company.
Like TelexFree, BBOM accepts investments from affiliates in exchange for a monthly ROI, along with recruitment commissions and matching bonuses.
Whereas TelexFree used the guise of VOIP services, BBOM pretended they were selling GPS services to customers through a company named Embrasystem.
Upon further analysis of course things fell apart when you realised BBOM was paying out ROIs as soon as affiliates handed over their money, as opposed to when they sold the GPS systems they claimed to be selling through Embrasystem.
Following the announcement of Pernambuco’s Federal Police a few weeks ago, it seems they’ve been busy gathering evidence and building a case against the company.
Less than a month after the initial investigation announcement, presented evidence before a judge who subsequently ordered the freezing of BBOM and its management’s assets.
After analysing the documentation gathered by federal prosecutors, the judge agreed there was robust evidence indicating that BBOM’s business model is actually just a “Ponzi scheme”.
Participants are compensated only for referring others to the system, without regard to the actual generation of product sales.
In this case business sustainability is determined solely by payments made by members.
No surprises there… but just how flimsy was BBOM’s “we sell GPS trackers” business front?
The National Telecommunications Agency (Anatel), the agency responsible for licensing companies selling GPS devices, did not grant authorisation to EMBRASYSTEM, known as BBOM or UNEPXMIL to sell this type of product.
Granted you don’t eed to worry about licensing when you’re not really selling GPS trackers but are infact running a 300,000 plus member strong Ponzi scheme, but still…
Seemingly under the impression that this was all just a big misunderstanding, following yesterday’s court decision, Ednaldo Bispo (BBOM’s Director) told reporters that
I don’t yet have access to the decision, but despite these irregularities the company’s payments to its promoters will continue normally.
I think our business model was not properly explained and as such I can understand the position of Justice. People do not like things they don’t understand.
It will be a great opportunity to show how BBOM works.
Not properly explained? Just so we’re clear here, you sign up to BBOM and pay them $300, $900 or $1500. They then pay you $80, $240 or $400 a month, depending on how much you invested with them.
The Judge certainly seems to understand the model:
According to a statement posted on the website of the Federal Court the 1st Region (TRF-1), Luciana Laurenti Gheller, substitute Judge in the 4th Federal Goiânia, held that the payments made to each participating affiliate “depends exclusively on the recruitment of new affiliates”.
BBOM charge membership fees ranging from £600 ($300 USD) to £3000 ($1500 USD).
What exactly Bispo and BBOM’s lawyers are going to “explain” in court is mystery.
Oh and the lack of a GPS license? No worries.
The company that provides the tracking service does not need approval, but the equipment, yes. We have all the approvals given directly to the manufacturer.
Naturally the manufacturer have to be licensed as they sell the trackers to retailers. And I’m pretty sure the Public Prosecutors and Judge have done their homework on who does and doesn’t need to be licensed.
I mean Public Prosecutors would have had to check with Anatel themselves to firstly establish whether or not they indeed needed a license and then whether or not they had one. Just saying…
Still, Bispo waltzing into court and attempting to school everyone on the matter should be amusing to report back on.
Oh and BBOM paying its affiliates with its assets frozen should be quite the spectacle too. Good luck with that guys.
Those affiliates in TelexFree would do well to observe the BBOM case, as it’s probably exactly what’s going to happen once TelexFree exhausts its avenues of appeal.