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Beware Ponzi Scheme Artists!Ponzi scheme artists are alive and well in the world and you as home business owner should know how to spot them before investing in something to make money from home. No need getting all excited about a program before doing the research to discover if it is moral and legal. After-all, getting scammed is not only a great way to lose money, but also a great way to lose credibility for years. Why risk it? Research things before investing in them. These scams were named after Charles Ponzi, an Italian immigrant to the US in 1903. He did not invent this type of illegal scheme, but he was the first to become known throughout the US because of the amount of money his organization took in. In a Ponzi scheme, the schemer interacts with all victim investors directly. This is different from a pyramid scheme where all participants must recruit new investors in order to benefit from the scheme. His scheme was really quite simple compared to today’s more refined and complicated schemes. All these schemes take advantage of investors’ gullibilities. Investors are promised extraordinarily high returns on non-specific investments such as “Offshore investment”, “High Yield Investment”, “currency arbitrage”, “hedge futures”, etc. through insider connections. The promise of high returns (sometimes 25%) for a fairly small investment entices especially attracting well-to-do investors who are ecstatic with the returns received and are quite ready to invest again. Since there is actually no product or service yielding any profit, the “returns” are paid from incoming money of new or return “investors”. So there is an ever increasing need to recruit new participation in “investments” to pay the unusually high “returns”. Investors loving the high returns continue to reinvest, and just leave their money in, so that it supposedly increases in value. The scammers never have to pay out too much as long as they continue to send out statements showing investors how much their investment has grown. Investors are encouraged to leave their money in for longer time periods for an even higher return. In this way their funds are frozen. So a Ponzi scheme can usually survive longer than a pyramid because it’s participants are continually “re-investing” their own money, and there is not so great a demand for constant and exponential growth in recruits in order to keep the scam afloat. Eventually, the scheme is exposed whenever authorities examine the “enterprise” and begin discovering missing assets… Or, when investments slow down causing the promoters to have trouble paying back “returns” which in turn causes a “run on the bank” so to speak… Or, when the originators simply disappear with all the investment money.
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