The $100 Million Game Turkish Officials Worry Is Pyramid SchemeBy and
Farm Bank’s 26-year-old founder says he’s building a real farm
Turkish authorities have already banned game’s advertising
Mehmet Aydin, developer of the $100 million video game at the center of a pyramid scheme investigation in Turkey, says he was first inspired by FarmVille.
Like the online farming simulation game that was popular earlier this decade, his Turkish knockoff, Farm Bank, allows players to buy virtual animals, and produce and sell virtual crops. The difference is his participants must invest real cash – so much of it that Aydin claims he’s going to open Europe’s biggest dairy farm with the proceeds.
“I saw all these Ponzi schemes online and I thought ‘these fraudsters are dumb,’" Aydin, 26, said on the 550-acre plot of farmland he bought in November in the central village of Pazarkaya, about halfway between Istanbul and Aleppo, Syria. “They should be making real investments with the money they collect from people instead of tricking them.”
What Aydin insists is an innovative way to allow regular people to earn money and help revive an ailing industry has raised suspicions among authorities concerned the wildly popular game is a scam that will eventually collapse and leave many Turks empty handed. Ciftlik Bank stopped accepting new members on Tuesday pending the results of government investigations.
Turkey’s customs and trade ministry has banned advertisements from Farm Bank, or Ciftlik Bank as it’s known in Turkish, for three months to avoid misleading consumers that may think it's a real lender. The game is ``leaning toward fraud,’’ Minister Bulent Tufenkci told reporters on Wednesday. ``It looks like an attempt to form a pyramid or ponzi scheme."
Trying to dispel anxieties, Aydin had invited his fellow citizens late last month to the Anatolian site outside where he says he’s going to build a $185-million dairy facility. It’s meant to house 35,000 head of cattle, owned by Ciftlik Bank investors.
Braving a frigid rain, hundreds of Turks traveled from across the country for reassurance that they weren’t being duped.
“I had trust issues at first, but they gained my trust after I saw that the investments are really happening,’’ said Hasan Celebi, 23, who traveled about 1,100 kilometers (680 miles) from the eastern province of Erzurum. “You put in 1 lira and you get back 2.25 liras in a year with Ciftlik Bank. I will get a bank loan to invest more.’’
Aydin, who learned how to program video games by watching YouTube tutorials, couldn't have fathomed how quickly Ciftlik Bank would gain momentum after launching it in August 2016. Players start by opening free online accounts. Then they buy virtual animals -- sheep, cows, bees, chickens -- and purchase food to feed them until production of milk, honey or eggs kicks off. They sell crops for profits that can be cashed in for liras or reinvested to expand their virtual farms.
Investors have dedicated more than 400 million liras ($106 million) so far and Aydin says there are 350,000 domestic and 150,000 foreign players of the Ciftlik Bank, whose parent – Fame Game -- is based in Northern Cyprus to avoid tax.
Advertisements on Facebook, Twitter and YouTube carried a theme song that pledges you'll “double your investment in one year.” According to the Ciftlik Bank website, in the event of bankruptcy the company guarantees principal payments and those who invest 5,000 liras or more get a written contract.
Promises like this have raised red flags among Turkish authorities. Along with the trade ministry, which started its probe last month, the Capital Markets Board filed a criminal complaint against Ciftlik Bank, saying it carries features of a pyramid scheme. The Ministry of Industry lodged a separate complaint accusing Ciftlik Bank of falsely advertising that Aydin would receive an award from Minister Faruk Ozlu in Malaysia.
“It’s impossible for it to pay the high returns it promises,” the Capital Markets Board said in a Dec. 28 statement.
The Turkish phrase “saadet zinciri’’ refers interchangeably to pyramid and ponzi schemes, which are get-rich-quick scams that typically offer returns to investors from money paid in by subsequent participants. In ponzi schemes, though, participants believe they are earning returns from their investment. Both systems aren’t sustainable and eventually fall apart, typically leaving later investors with nothing.
“No sector is this profitable,” said Oguz Yavuz, an Istanbul-based lawyer specializing in information technology and trade. “For Ciftlik Bank to keep running, more members need to keep entering the system. This implies that Ciftlik Bank is a Ponzi fraud that can only exist by paying the old members’ money with new members’ money."
Aydin insists his intention isn’t to trick anyone. He's always wanted to invest in agriculture and the game provides him with the cash to do so. He spent 15 million liras on the plot of farmland and aims to start producing milk by the second half of 2018. The company is even signing franchise agreements with vendors across Turkey.
“I want the government to investigate me and my company. I want it to be over as soon as possible,” Aydin said.
While he discourages people from selling their houses or cars to participate, some are doing just that. Hamza Aslan, a 58-year-old former car salesman, sold his cars to raise 250,000 liras to invest. He predicts the project will help ease inflation by bringing down food prices.
But Tevfik Keskin, who heads Turkey’s Milk Producers Association, said the past three years have been “terrible” for dairy producers as wholesale milk prices plunged. “Lots of dairies are shutting down,” he said.
Gross profit margins for publicly traded Turkish milk companies range from 15 to 20 percent -- a far cry from what Ciftlik promises, added Erdem Hafizoglu, an analyst at brokerage BGC Partners in Istanbul.
At the ground-breaking ceremony for the farm, there weren’t many cynics. The district mayor attended and the emcee likened Aydin to one of President Recep Tayyip Erdogan’s son-in-laws, Selcuk Bayraktar, the 38-year-old heir to a defense industry firm, for both being successful at a young age.
Ciftlik Bank has gained traction in part by capitalizing on the rise of nationalist and religious sentiments at a time when Turkey’s divisions with NATO allies are deepening. Many players see Ciftlik as serving a patriotic purpose of helping ease Turkey’s reliance on imports. Appealing to these sensibilities, the event began with a reading from the Koran and ended with Ottoman military band performances.
“I plan to invest around 20,000 liras at first and, if it all goes well, I might even sell my car to invest more,” said Seyhmus Onum, 30, who traveled over 1,000 kilometers from Mardin to be there.
Aydin, who says the farm can be fully financed with members’ cash, has already branched into new ways of making money. In a Facebook post this month, he said he’s taken up mining – of Bitcoin.