The emu is the largest bird native to Australia. It is the second tallest bird after the ostrich.

Recently on a trip to Pollachi, I saw a large number of emu bird farms with large posters put up by them claiming handsome returns.

When I commented that these are sure to be fly-by-night operations that fleece gullible public, the cabbie said they give good returns and that many people have invested in them. This reinforced my suspicion that it was likely to be a scam.

Recent reports suggested that it indeed was a scam. Not only have people lost money, but the poor birds are dying due to hunger. The idea is simple: you can raise the chicks, get eggs and sell the meet/eggs for a profit. The only hitch was that this was a Ponzi scheme, instead of what a legitimate, tough business poultry farming is.

Here's how. You approach a emu farm and pay Rs. 1.5 lakh and get two emu chicks, monthly maintenance of Rs.6000 and yearly 'bonus' of Rs.20,000. After two years the 'farm' would take back and grow the emus and give you back your Rs. 1.5 lakh deposit.

Celebrities endorsed the idea and investors poured in with cash. A cursory glance showed that returns were promised around 75 per cent per annum. The first warning sign of such scams is when the returns promised are always high. The investors should have asked as to why can't the 'farm' owners do it themselves if rearing emu is so profitable. There is now a Tamil Nadu Emu Association with a website of its own making tall claims. The Hindu has reported that the loss could be as high as Rs.500 crore.

Even if we assume that emus are profitable the question is who eats emu meat? The 'farms' claim that the meat is cheap, nutritious and exported bur there is little proof that it is either exported or consumed locally.

These schemes, infamously called Ponzi, are as old as civilisation itself and many intelligent people have been defrauded. Human memory is so short that in next two years another get-rich-quick scheme will come and we will forget these poor birds. We have had such schemes in the past (remember teak wood plantations, high return fixed deposits?) and we will have them again.

History records the tulip flower scam in Holland. Such flowers there are as common as coconuts are here. Hope we don't have a coconut scam in India. The products are never the main thing in such schemes; they offer only a diversion for the underlying scam. It can be a bird, a herbal drink, dietary supplements; anything will do.

The main characteristic of such schemes is that the inflows from new investors are used to give returns to existing investors and the chain continues so much in geometrical progression that very soon everyone is either an emu farmer or a multi-level-marketing pyramid scheme agent waiting for his instalment; so new investors are few but existing investors are many. At that point the farm owner/founder usually vanishes and the whole thing collapses.

Here are some easy ways to identity such fraudsters;

• If it involves very high returns (with free gifts included!) then it is mostly likely to be a Ponzi scheme. (If a person can double his money in six months, why is he taking your money?)
• If it requires attending a seminar where many success stories are shared and the organisers create pressure on you to decide then and there to join.
• If it involves you recruiting others as agents and they in turn recruit others and so on.
• If they do not fall under any regulator for investments; be it SEBI or RBI. (But they are likely to make claims that they are registered under the Societies Act or approved by Government, etc.)
• We live in a world where it is tough to earn money. It may be okay to lose it in a genuine business transaction, but it is sad if we lose it to a scamster. A fool and his money are soon parted says the old proverb. "How did they come together in the first place"? asked the wag.

– (Courtesy: Industrial Economist)