Institutional racism has created such a huge wealth gap in America that pyramid-scheme promoters are able to persuade Blacks to put aside common sense with promises that they can have a piece of their denied American Dream.

Widely circulating in the Black community is a new version of the chain-letter pyramid scheme in which people are recruited and then encouraged to bring in others with assurances that they can all make three-digit returns in a matter of weeks.

Except the large payout is simply money collected from recruits. There’s no wealth-building — only the shifting of money to people who got into the scheme earlier. Eventually, the enterprise collapses when not enough folks can be persuaded to join, which stops the flow of money.

The scheme might be called a “blessing loom” or “sou-sou.” But the name doesn’t matter — it’s an illegal pyramid scheme that’s stealing credibility from legitimate sou-sous in which members aspire to help one another save for a specific purpose and nobody receives more money than they put in. This informal savings model is often utilized in communities where people can’t easily get loans to fund a business or don’t have access to traditional banks.

After recent columns exposing the spread of the illegal schemes, some readers asked me how people can be so gullible.

Here’s how.

The disempowered make perfect pyramid victims.

“For most of its history, the United States excluded people of color from its main pathways of opportunity and upward mobility,” a 2019 Urban Institute report pointed out. “This history of discriminatory policies and institutional practices created deep inequities across social and economic domains.”

And the coronavirus pandemic is disproportionately hitting Blacks hard precisely because of structural racism.

“It’s a sad fact of life in today’s society,” Maryland Attorney General Brian E. Frosh (D) said in an interview. “Millions have lost their jobs. Millions are probably going to lose their homes at the rate things are going. People are disenfranchised. It’s a very scary time economically.”

It’s easy to sell the hope of economic prosperity to people who have long been shut out of the systems that favor non-minorities. Look at housing, Frosh said.

The legacy of redlining that prevented Blacks from buying in certain neighborhoods or denied them access to credit still affects Black homeownership rates, which are near the same level as when race-based housing discrimination was declared illegal with the passing of the Fair Housing Act of 1968.

A colleague recently reported on a study that found unfair property assessments have resulted in Black families paying 13 percent more in property taxes each year than a White family would in the same situation. “We document widespread racial inequalities in the U.S. property tax burden,” the economists conducting the study concluded.

Job discrimination and pay inequality has resulted in Blacks earning less than Whites.

Institutional racism has prevented Black businesses from getting bank loans.

On this last point, the National Community Reinvestment Coalition (NCRC) and researchers from Utah State, Brigham Young and Rutgers partnered to send testers to 32 bank branches representing 17 randomly selected financial institutions in the D.C. metro area. Researchers wanted to see how Black business owners might be treated in seeking pandemic-related relief.

The NCRC teamed up with the universities to determine whether the disparities in small-business lending that were present before the pandemic continued with the Paycheck Protection Program (PPP), which was aimed at helping small businesses retain employees. Testers had similar credit profiles. The only major difference was race.

In 43 percent of the interactions with the financial institutions, White testers received more-favorable treatment than Black testers, the researchers found, which is a violation of the Equal Credit Opportunity Act.

Unfair treatment like the researchers found with the PPP creates the ideal selling point for pyramid schemes. Promoters argue that they are helping build wealth in the Black community in a way that isn’t subject to familiar forms of racial discrimination.

“It’s a very attractive pitch because there’s an underserved community that’s been blocked out of things,” said Maryland Securities Commissioner Melanie Lubin. “But they’ve taken the name of a sou-sou and stapled it to a pyramid.”

Although the people encouraging you to join an illegal sou-sou are right about the economic injustices Blacks have historically and presently face, their answer to correcting the problem is wrong.

There are better and more-legal ways to right the wrongs Blacks have endured. Read the Urban Institute’s report: “What would it take to overcome the damaging effects of structural racism and ensure a more equitable future?”

There is a right way to build wealth in the Black community, but participating in one of these schemes is not one of them. It’s selfish. Your actions, even if you make money, will result in financial losses for Blacks who get into the scheme late in the game, and this is as unjust as the discriminatory practices promoters rail against in their recruitment efforts.