Capitalist Chicanery Contagious Transparent Scam In Albania Had Duped Thousands Earlier

As Albanian leaders began blaming one another Tuesday for a series of investment swindles that cost people hundreds of millions of dollars, experts said the debacle fit neatly with a pattern that has now bedeviled almost every formerly communist country in Europe.

The collapse of Albanian pyramid schemes in the last two weeks, igniting riots in Tirana, the capital, and other cities, was almost identical to calamities for tens of thousands of people duped by similar schemes in Russia, Romania, Bulgaria, Serbia and other places.

In each case, companies bombarded people with advertisements and other promotions that guaranteed phenomenal returns on their investments - 30 percent a month, in the case of one Albanian scheme.

By Western standards, the schemes are breathtakingly transparent. The guarantees of huge profits were impossible. The promoters offered no explanations for how profits would be made. The advertisements, dwelling on images of fast cars or exotic beach vacations, would raise an immediate red flag in the United States or western Europe.

Yet hundreds of thousands, if not more, people in the former East Bloc countries have flocked to such schemes. Three years ago, a huge Russian investment scheme called MMM collapsed after attracting about $1 billion with glitzy television ads promising certain profits.

In Serbia, residents of Belgrade lost millions by believing in huge monthly interest rates offered by the Dafina Bank in a type of pyramid scheme. In Romania, thousands of customers in the city of Kluj went to a football stadium to hand over fistfuls of cash to promoters of a pyramid scheme called Caritas, or Charity.

And now, in Albania, people have been entrusting their money to at least 10 major pyramid operators, one of whom is a gypsy fortune-teller who claimed to know the future - at least until she declared bankruptcy two weeks ago and was jailed.

Experts say the wave of swindles in these countries is symptomatic of their lack of experience in Westernstyle investment. Popular understanding is limited, protections are almost nonexistent and many people are grasping at straws because they are in dire economic straits.

“People are betting on miracles,” remarked Anneli Gabanyi, a Romanian-born economist at the Sudost Institut.

“But if you had been through what these people have been through, it’s not so hard to understand. If you had seen communism suddenly collapse, without violence, wouldn’t you believe in miracles too?”