The Ponzi scheme has been around for a long time, even before its namesake pulled off his famous 1920’s scam. Although it has always been a popular way for fraudsters to take your money, it has seen a huge resurgence in recent years. What factors are present in the current economic climate to make the Ponzi scheme such an attractive and dangerously successful scheme?
A Poor Economy
There can be no argument that the economy has been bad for years. Lay-offs, low interest rates, and shrinking paychecks have made it even more important to move beyond a simple savings account to assure you'll have the money you need for the future. As more people look for the best investment, or for an even slightly higher interest rate, the Ponzi scheme's “promise” of high returns on an initial investment becomes a big temptation for those who are struggling.
Additionally, as a large population of baby boomers ages, and Medicare cuts make the future shaky, those nearing retirement age are realizing their nest egg may not be enough to cover their needs after the age of 65. With retirement looming, there is a large population of people who don't have time to wait out a bad economy. Ponzi schemes targeting people of retirement age are rampant because they “promise” such fast, steady returns.
Worries About Safety and Stability
Along those same lines, people who are able to save a little money want to put it somewhere where it will safely grow, weathering the economic storm. The Ponzi scheme gives the appearance that it is truly what it claims to be, as investors up the ladder start to see immediate benefit. The scammer "promises" high returns, giving the illusion of safety and abusing your trust.
Relying More on Friends & Family
Because the market is flooded with investment options, and because so many inexperienced investors are looking for opportunities, many people are turning to their friends and communities for advice. Called “ affinity fraud,” fraudsters are able to use that trust and desperation to their benefit, sometimes wiping out the life savings of entire church congregations or families.
Ultimately, you should always be on the lookout for an investment opportunity that seems too good to be true, and be wary of ANYONE who claims they can "promise" you a huge return. If you have lost money in a Ponzi scheme, an experienced attorney can help explain your options. Meyer Wilson represents investors nationwide, and may be able to assist you. Contact us today.