The consequences of numerous multi-billion VND pyramid scheme collapses in Do Luong.

(Baonghean.vn) - On December 17th, Colonel Thai Khac Thong, Head of the Do Luong District Police, stated that the unit had issued a written response regarding the complaint from residents accusing Ms. Nguyen Thi Nhung (37 years old, Dai Son commune) of borrowing money and failing to pay her installments. “After investigation, the police determined that the matter falls under civil dispute and therefore sent a document to the residents requesting them to submit a petition to the court for resolution,” Colonel Thong said.

According to the complaint, more than a year ago, Ms. Nhung joined a rotating savings and credit association (ROSCA) run by Ms. Nguyen Thi Hong (49 years old, Hamlet 10, Tru Son Commune). This ROSCA had nearly 120 members from four communes: Tru Son, Dai Son, Hien Son, and My Son. Initially, Ms. Nhung paid the ROSCA installments in full. However, in August of this year, after receiving over 2 billion VND from the ROSCA, Ms. Nhung withdrew her money.

The informal lending group run by Ms. Hong has nearly 120 members from 4 communes participating.

"When it was other households' turn to draw lots, Ms. Nhung refused to pay her debts. Excluding the amount she had previously paid to the ward on a regular basis, the total amount Ms. Nhung has embezzled from the members is over 1.2 billion VND," the ward leader said, adding that the members had held meetings several times and agreed to go to her house to demand payment, but Ms. Nhung deliberately refused to pay and even challenged them. Furthermore, her family members even assaulted and threatened them with sticks.

This is the third time in the past year that the informal lending group run by Ms. Hong has collapsed. The total amount of money lost in these three instances exceeds 7 billion VND. “There are also many other cases, but most of the debtors asked for extensions. Seeing their difficulties, their trusting attitude, and the fact that they were genuinely bankrupt, the members of the group didn't demand payment urgently. However, cases like Ms. Nhung's, where people take money from the group and then lend it out at exorbitant interest rates, build houses, or buy land, are unacceptable,” said Mr. Nguyen Thuy Tam (65 years old, Hamlet 10, Tru Son Commune), and requested that authorities suspend Ms. Nhung's transactions to prevent her from disposing of her assets. More than two years ago, Mr. Tam's family saved money to pay into the group monthly. He has paid over 200 million VND so far, but the group collapsed before he could receive his share.

The members gathered at the head of the informal lending group's house to sign a petition against Ms. Nhung.

While not losing as much money as Mr. Tam, over 40 million VND is a fortune for the family of Ms. Nguyen Thi Long (44 years old, Tru Son commune). The couple only owns a few small plots of land, and they work tirelessly year-round just to make ends meet. Meanwhile, their son suffers from epilepsy and requires a large sum of money for treatment. Unsure where to find the money, Ms. Long decided to borrow 7 million VND each month to participate in a rotating savings scheme, hoping to receive a large sum to take her son to the hospital.

However, the incident occurred just six months after she joined. “Now I don’t know what to do. Losing money has caused marital discord. It’s not just my family; now, every couple here is constantly arguing, all because of these informal lending schemes,” Ms. Long sobbed.

Mr. Dang Van Toan, Chairman of the People's Committee of Dai Son commune, said that Nhung not only participated in the rotating savings scheme run by Ms. Hong but also contributed to other schemes in many places. After withdrawing money from one scheme, Nhung would deposit it elsewhere. In addition, Nhung used this money to build a house and buy a car. “Nhung also operated like a bank. She accepted money from anyone who deposited it and earned interest. Then she used that money to lend to others at exorbitant interest rates. She was both a debtor and a creditor. However, when the debtors couldn't repay, Nhung began to face bankruptcy,” Mr. Toan said.

Because the operation of informal lending groups is not regulated by any agency, the local authorities do not have accurate statistics on cases of failed lending groups. However, according to Mr. Toan's estimate, in Dai Son commune alone, there are about 50 people similar to Nhung's case, with debts amounting to hundreds of billions of dong.

"In Dai Son, the number of cases is not yet large; many more remain unexposed. These include even civil servants. The majority of these failed informal lending schemes lack the necessary elements for prosecution; we cannot prove fraudulent activity, even though we would very much like to prosecute," said Colonel Thai Khac Thong, adding that local authorities need to actively educate the public to discourage participation in informal lending schemes and high-interest loans due to the high risk involved.

Tien Hung