What Is A Ponzi Scheme? How To Avoid Being A Victim!
What is a Ponzi Scheme?
Basically a Ponzi scheme is a form of Investment fraud. What occurs is the perpetrator of the Fraud promises the victims a high return on their investment or dividends that cannot be acquired through legal and honest investments
The Fraud occurs when the criminal uses the victims investment money to pay the dividends to prior investors instead of making actual investments. Then when new victims are found their investment money is also used primarily to make it look like the Fraudulent Scheme is a great investment opportunity.
The Ponzi Scheme will crumble when the Fraudster disappears with a large amount of the investors money or they cannot find any new investors to uphold the payout of dividends.
"Ponzi" as this form of Fraud is called comes from a man named Charles Ponzi of Boston Massachusetts. Mr. Ponzi created an extremely attractive investment opportunity by guaranteeing his victims a fifty percent return on their investments in postal coupons.
At first he was able to uphold the guarantees and pay his initial investors. The whole Fraud came to light when Mr. Ponzi was unable to maintain the payments to the investors who fell victim to the scheme at a later date.
How you can avoid falling victim to Ponzi Schemes.
Any time you invest money you should research the opportunity before handing over your money. Not only the investments but the people you are investing with should be thouroughly researched.
Do not invest any money unless you have a full understanding of exactly where you are investing your wealth.
If someone makes an offer that seems "too good to be true " then you should suspect that something is not right with the offer.
How can someone guarantee a higher return on an investment then all other investment opportunities available.
The Life and Times of Charles Ponzi
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