How to spot a Ponzi scheme

ponzi scheme

NAME: Ponzi scheme

NATURE: illegal

SOLE PURPOSE: investment

PROFIT GENERATION: new investors and increase in investment fund

ENTRY: payment of investments

PRODUCTS/SERVICES: None

OPERATIONS:

  • The promoter(fraudster) promises high investment returns with little or no risks involved
  • all investments are directed to the promoter
  • Dividends are paid to initial investors using the funds of subsequent investors

INTERACTION WITH PROMOTER: Direct

COLLAPSE: Depends on the gullibility of the investors

BENEFICIARIES: The promoter

LOSERS: investors

REFUND: None

Related Posts: How to spot a Multi level marketing (MLM) plan ; How to spot a pyramid scheme

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