"When you whistle, they dance," he said. "And they peck at your jewelry. They like gold, like most Indians."
In what may be the most bizarre Ponzi scheme in recent memory, more than 10,000 Indian investors are said to have lost $50 million after the collapse of what authorities are calling a massive Ponzi scheme centered around raising Emus. According to Indian authorities, investors who agreed to raise an Emu chick were promised to double their investment within two years. The alleged mastermind behind the scheme, M.S. Guru, was arrested in early August and charged with conspiracy and cheating after initially fleeing his hometown following the scheme's collapse. Authorities must deal not only with the thousands of victims, but also what is estimated to be 100,000 emus abandoned by the fraudsters when the scheme later collapsed.
Guru founded Susi Emu Farms ("Susi") in 2006, offering investors the promise of a steady stream of income in return for raising an Emu chick. Additionally, after two years, investors were offered the ability to "exchange" their two-year old Emu for another Emu chick. A VIP program soon followed, in which investors could receive a similar return while Susi took on the obligation of raising the emu. Word quickly spread of the dependability of the promised returns, and an advertising campaign headlined by popular Indian film stars quickly made Susi a household name. The operation soon spread throughout India, with numerous copycat operations springing up demonstrating the popularity of the operation. Thousands of Indians chose to invest with Susi, with many mortgaging their home or dipping into their savings to increase their return.
However, while many investors simply took at face value claims that emu meat and oil was highly sought after, the truth was that neither emu meat, oil, or skin was a profitable venture. Instead, authorities believe that Guru and his associates ran a massive Ponzi scheme that used incoming investor funds to pay Ponzi-like returns to existing investors. This was possible when potential investors could be depended on for a constant stream of incoming funds. Additionally, existing investors were offered reinvestment "bonuses" to roll-over their investments at the end of the two-year investment term. However, when the pace of incoming funds was eclipsed by the required outflows to existing investors, monthly distribution checks ceased and the scheme soon collapsed. Authorities estimate that losses from 8,000 to 12,000 investors could eventually total more than $100 million.
To compound issues facing authorities in the wake of the scheme's collapse, at least 100,000 emus were abandoned at various Susi farms as Guru and his associates fled. When a public uproar ensued following the revelation that the emus were being left to starve, the Indian government was forced to step in and purchase $200,000 in emergency rations to feed the emus. Additionally, the price of emu meat has collapsed from $6/pound to just $1/pound as both the Indian government and afflicted investors pursue all avenues to get rid of their "investments".
To date, more than 4,000 investors have filed complaints with Indian authorities. In addition to Guru, seven others have been charged with various crimes for their involvement in the scheme. Authorities have also taken steps to freeze company assets.