Fraud-Ponzi scheme 25


Posted by: Christopher Arunkumar on Thursday, March 22, 2018

A fraud scheme which is named after a person himself should be an interesting one.

Charles Ponzi was an Italian immigrant who moved from Italy to Boston. He was a hustler for to make a quick buck. He devised a plan to sell postal reply stamps in the 1920s buying them from international markets and selling them in the US….to make a so called profit of buying low and selling high.

Charles Ponzi collected more than $8 million from over 30,000 investors hoping to double their money in 90 days or so..

His idea was very simple and novel for that time, payoff the early investors from the deposits received from later investors.

He was arrested for defrauding investors and landed in prison for five years.

Some the noteworthy Ponzi schemes are mentioned here:

50 Billion.  Bernie Madoff https://www.cnn.com/2013/03/11/us/bernard-madoff-fast-facts/index.html

7 Billion. Robert Allen Stanford https://www.justice.gov/criminal-vns/case/stanfordr

1.2 Billion. Scott Rothstein http://abcnews.go.com/Blotter/scott-rothstein-50-years-12-billion-ponzi-scheme/story?id=10868086

Warnings

If it is too good to be true and then it must be true. Steady returns on investment when the market is going through the fluctuations is abnormal. Returns on investments should vary based on market ups and downs.

Usually the ‘income’ you receive is from the new investors funds paying off the old investors

Watch out for the statements. Are they internally or externally prepared brokerage statements?

Would the investment company fight you should you pull out ALL your funds?