Ponzi
Named after Charles Ponzi, who in 1919 stumbled upon a money making scam, Ponzi schemes are fraudulent investing scams that generate returns for older investors from money provided by new investors. One of the largest and most famous Ponzi schemes was executed by Bernie Madoff, who defrauded at least 37,000 investors, over the course of 40 years, out of $65 billion.
Means of contact
- Internet
- Phone
Scammer recruits investors to buy-in to a higher than normal return on their investment. Using testimonials from earlier investors, as more investors buy in to the investment, the scammer uses the new investors’ money to pay out a return to earlier investors, making the investment appear very profitable. However, the payout will eventually collapse as the well of investors dries up, leaving a majority of the investors out their money.
Tactics used
- High returns
- Unusual job tasks, often using your own funds upfront or through a cheque deposit
- Special "exclusive" investment opportunities
- Investment offers from people and organizations you don’t know
- High pressure sales tactics
- Avoiding answering questions about the return on your investment