A Ponzi scheme is a type of investment fraud. It involves an illegal business practice where individuals are tricked into investing their money in a false business in return for hefty profits.
Cybercriminals are defrauding investors in a rising number of Ponzi Schemes. Reported figures indicate a 70% jump in the second quarter this year. The extent of increased frauds documented by agencies worldwide is becoming a growing concern.
Cyber-Forensics.net, a cyber forensic service for online scam victims, analyzed the consumer complaint data only to find that millions of victims referred to increased Ponzi Schemes, crippling them financially.
Cyber expert Timothy Benson at the firm says, "a typical victim loses more money on investment scams than any other type of income fraud."
How does Ponzi Schemes work?
Scammers trick people into investing money in fake businesses and promise to pay high financial returns. The participants are made to believe that their money is being invested in a stock market or a business when in reality, the investor's money is just moved to the account of another investor. The fraudster's investment looks like a successful venture.
Ponzi schemes are immensely complex. Fake Schemers can involve:
- A complicated set of facts
- Multiple federal security regulators
- Law enforcement agencies
- Retargeting a significant number of victimized investors
The curious case of Colorado Rancher
A 79-year-old Colorado rancher, Richard K. Sears, defrauded more than 100 investors of nearly $5 million in a cattle Ponzi Scheme related fraud.
According to investigation reports, Sears proposed to use investors' cash to develop a new breed of cattle, Rocky Mountain Romangus- that never existed. In return, investors would either receive an annual payment of 10% of what they paid or the right to reclaim cows after a certain period or a return of total investment.
However, one investor got suspicious of the gimmick and filed a court order. Sears pleaded guilty and "agreed to pay $4.97 million in restitution."
Timothy Benson, who analyzed the case in detail, says: "The Ponzi schemes are greater than we think. Consumers find it difficult to distinguish between fake investment schemes and genuine investment schemes."
Benson added further: "The saddest part is people often use their homes, savings, and cars as collateral. The Ponzi scheme victims become depressed when they do not get sufficient support."
How to avoid getting scammed by a Ponzi Scheme Fraudster?
One way is to look for over-emphasis on hefty profits with minimal investment. It is probably not a legit investment business when any business promises unrealistic profits.
Do's and Don'ts
Keep Cyber-Forensics.net tips in mind to avoid falling victims to Ponzi Scheme tricks:
Do's
- Be aware of any investment that promises to pay regularly positive returns regardless of the overall market.
- Avoid investing in any complicated schemes or schemes that business proposal makers cannot explain.
- Get complete information about the business before associating with them.
- Stay vigilant about fund recovery procedures.
- Be alert about account statement errors. It may be a sign of investment fraud.
- Be suspicious in case of non-payment or difficulty in cashing out.
Don'ts
- Never put real money in one scheme that promises big returns with little or no risk at all.
- Do not contribute to any plan related to investment if a business is not registered or does not comply with state regulators.
- Do not get involved with any business or proposal maker if the firm offers unlicensed investment.
Who to Call When a Ponzi Scheme Encountered?
When someone suspects that they are being duped into joining a Ponzi scheme, they should alert the authorities, including:
- Securities and Exchange Commission (SEC)
- Financial Industry Regulatory Authority (FINRA)
- *State Security Administrators to specific countries and regions
What can Ponzi Scheme victims do if they have been targeted?
- Talk to brokerage firm
- Gather and secure all relevant documents/ records
- Get advice from experienced attorneys
How to Get Money Lost in a Ponzi Scheme?
Reaching out to law enforcement who have the right tools to stop complicated fraudulent Ponzi schemes can increase the chance of getting money lost in any scam. They are often equipped with fund recovery specialist teams and advisors who can guide victims efficiently.
How do Lawyers/ Experts Help Victims Recover Money Lost in Ponzi Scheme?
One of the many reasons Ponzi Scheme victims should consult an expert law practitioner/ advisor is that brokerage firms and third parties may be held legally liable if involved in fraud.
Above all these, legal experts can help scam victims explore possible avenues to gain full and fair financial compensation for the investors' damage.
Therefore, it becomes crucial to choose an experienced team of professionals to deal with the case. One such firm that has good reviews is Cyber-Forensics.net. The lawyers practicing in the field have helped thousands of fraud victims.
About Cyber-Forensics.net
Cyber-Forensics.net is committed to providing the most accurate tracing service for victims of online scams. Cyber-Forensics.net empowers and simplifies the process of tracking down the cyber-criminals and assists in recovering the funds and creating an atmosphere for a negotiated settlement. For more information, please visit http://cyber-forensics.net/.