Other Frauds
What is a Ponzi Scheme?
A Ponzi Scheme is a fraudulent investment operation where the operator, an individual or an organisation, pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned through legitimate sources. Typically, extraordinary returns are promised on the original investment. The fraudster will vanish with investors’ money, so the system eventually collapses with later investors receiving nothing – including their initial investment.
What you can do to avoid the Ponzi Scheme trap?
- If you're considering any type of investment, seek advice and do research before investing.
- Ponzi fraudsters use vague technical jargons to describe their non-existent investments, such as ‘high yield investment programme' or 'global currency arbitrage'. Don't get dazzled or swayed.
- Always ask simple questions about the company and the scheme. Be on high alert and, if they try to dodge questions, be more persistent.
- Ask about the board of directors who are managing the scheme and ask to meet at least one of them.