Have you invested in a Ponzi scheme? Warning signs.

Posted about 4 years ago. 4 helpful votes

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1

Guaranteed rate a return

All investments have risk. Period. If you are promised a specific rate a return, then be sure to review the fine print of the investment materials. Similarly, if you are promised a rate of return that is significantly higher than other investments, and purportedly unaffected by market downturns, then the investment must be scrutinized.

2

Generate higher returns by participation

If you are provided with the opportunity to generate higher returns by recruiting others, or if you are provided with the opportunity to generate higher returns by contributing more money toward the investment, the investment may be a Ponzi scheme. These tactics are used to perpetuate the existence of the scheme.

3

Vague Account Statements

If you are not provided with account statements that show how the money is being invested, then you must immediately question the veracity of the investment. Request specific documentation showing how the money has been used. Do not settle for a simple statement of account from the issuing company.

4

Illiquidity

If you ask to withdraw your money from the investment, and in return, you receive stall tactics, such as no response or a delayed response to your request, or if you must wait a period of time before a withdrawal is permitted, then the investment may be questionable.

5

Protect yourself

Before investing, research the background of the company and the background of the agent or broker. Make sure that the agent or broker maintains a valid license. Have a family member, friend, CPA or lawyer review the investment materials before you purchase the investment. Do not be embarrassed to question the investment. Be aware that even an "innocent" investor in a Ponzi scheme may be subject to suit in a fraudulent transfer action if the investor withdrawals money during the course of the scheme.

Additional Resources

Ewusiak & Roberts, P.A.

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