Anyone Can Be a Ponzi Scheme Victim
When people hear of someone who was victimized by financial fraud, they frequently envision a person who has little understanding of investments and is easily tricked. However, that is not always the case. Fraud victims have various levels of investment experience, as well as different educational and professional backgrounds. In reality, investment fraud can happen to anyone.
People Who Are Ponzi Scheme Targets
Every year, countless investors lose money to Ponzi schemes. This form of fraud, which involves using money from new investors to pay initial investors, is prevalent throughout the country. It has impacted people from numerous income brackets, including celebrities.
The people who are typically the targets of these investment scams include:
- Those with relationships with their financial advisors, accountants and trusted professionals
- Friends and family members of other victims
The Typical Ponzi Scheme
Scam artists are able to lure investors by promising high returns in a short amount of time. The investments are usually described as safe and secure, which couldn’t be further from the truth.
Here is an example of a typical Ponzi scheme:
- An investor is promised a certain percentage return each month.
- At the end of every month, the scam artist pays the investor this return from the money collected from new investors, which acts as dividends.
- Since the investor is receiving what he or she perceives as dividends, the investor may encourage friends and family members to invest.
- As soon as the pool of new investors dries up, the Ponzi scheme starts to collapse.