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In a Ponzi scheme, investors are duped into believing they’re making
fantastic returns on an investment—but, in actuality, there is no
investment, and they’re being paid off with the cash that’s
coming in from new investors. For a
Ponzi scheme to work, the fraudster has to keep the ball rolling, bring in new investors,
and continue to look both credible and trustworthy.
Here are just a few of the tactics Ponzi schemers and other financial fraudsters
often use to keep up the appearance of legitimacy in a Ponzi scheme:
Obscure or confusing strategies. Some fraudsters will come up with a confusing investment strategy or complicated
product in order to deter investors from digging too deep.
Prior investors who are receiving checks. When you can point to the returns other investors have made, it gives the
fraudster’s far-fetched claims more credibility.
Prior investors willing to talk about their “success.” Prior investors, particularly when talking to their friends and families,
seem to have all the evidence that investment is real.
False account statements. Investors seem to get a legitimate account statement, and it looks like
they’re doing well. Unfortunately, these documents are not hard to fake.
Asking you to reinvest. The promoter may urge you to roll your profits back into the investment—since
you’ve been doing so well, of course. However, this means that he
(or she) can go longer without actually having to put cash in your hands.
If you have lost money in a Ponzi scheme or investment scam, don’t
wait until it’s too late to get help recovering your losses. Speak
with an experienced and friendly securities fraud lawyer today.
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Investment Misconduct Blog
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