Uzbekistan is all a-hubbub these days over the case of a prominent businessman facing charges of fraud for his creation of what amounts to a crude pyramid scheme.
State television station Channel One on July 1 aired a second program in quick succession about the arrest of Ahmad Tursunbayev, who went popularly by the name Ahmadbai Chinazsky.
Tursunbayev’s arrest, in the middle of June, came as a major surprise to many.
According to Uzbek TV, 38-year old Tursunbayev and a group of around 30 collaborators duped people into handing over their savings with promises they would provide a minimum 100 percent return within the year.
The scheme appears to have gulled no small number of gullible investors. According to Uzbek state television, around 40,000 people willingly parted with cars, money and gold, apparently against written assurances that their profits would be paid. Curiously though, no guarantee was given that any money would be returned in the event of Tursunbayev’s death, presumably as some crude form of protection. Rumors on the streets of Tashkent put the number of defrauded investors even higher than that offered by Uzbek television, at around 80,000.
The scheme does not in truth appear to have been especially sophisticated. Tursunbayev’s team compiled accounting information in children’s school copybooks. Television footage showed stacks of hundreds of copybooks and huge bags spilling over with Uzbek sum and US dollars. Police reportedly seized a whopping 13.1 billion sum (around $2.1 million at the unofficial rate) and $12 million in hard cash.
In an interview with Channel One, a woman called Halima said that she sold 20 large sheep and handed Tursunbayev around $2,600 dollars in the hope of doubling it within a year. Halima said she is now penniless.
Tursunbayev was helped or at least enabled in creating his pyramid scheme by local police, prosecutors and city hall officials in the Tashkent district where he is based, Channel One reported.
In addition to helping himself to the money, Tursunbayev is accused of selling the cars he took as investments and selling on the second-hard market. Demand for affordable automobiles is high in Uzbekistan, so this is a most lucrative sideline.
A dealer at Tashkent’s largest second-hand car market told EurasiaNet.org that Tursunbayev’s associates offered extremely low rates on what they sold. At the end of June, investigators confiscated around 500 cars from the market, according to Channel One.
“These were cars given to Ahmad by his customers,” the salesman told EurasiaNet.org. “After the cars were seized, prices immediately went up.”
Tursunbayev certainly did not keep a low profile. On the contrary, he appears to have relished brushing shoulders with celebrities and showing off his rapidly acquired wealth.
Uzbek television showed footage from an enormous wedding held last November and organized by Tursunbayev for his son and 20 former residents of an orphanage. More than 5,000 people attended the wedding. Famous entertainers and singers were invited. Security was provided by several dozen policemen.
Many celebrities were reportedly among Tursunbayev’s many victims. Local media has had a jamboree with the story, running lists of famous people that invested money in the scheme. These include singers Ozodbek Nazarbekov ($400,000), Sherali Jurayev ($300,000), Rashid Halikov ($250,000) and Sardor Radimhon (a car and $15,000), among others. If nothing else, the list is an interesting insight into the kind of income that Uzbek pop stars appear to have at their disposal.
Tursunbayev was even given the chance to make a televised appeal for forgiveness.
The real fear that the authorities have now is that small-time duped investors who parted with all their savings could hit the streets in a show of protest, not something that Tashkent has any clue how to deal with other than violently.