1. PONZI SCHEMEA Simple Explanation of Basic Concepts
2. DefinitionA Ponzi Scheme is a fraudulent investmentscam that
pays returns to investors from theirown money or from money paid in
fromsubsequent investors rather than from profit itactually
makes
3. Working of a Ponzi Scheme1 | A Fraudster Places an
advertisement for a non-existentinvestment that offers
extra-ordinary returns in a shorttimeAfter receiving the promised
returns on their investment,the first investor starts to spread the
word to family andfriends. The scheme gains credibility| 23 |
Because there is no actual investment vehicle, there areno profit.
The first investor is paid from the money of theother
investors
4. Working of a Ponzi Scheme5 | Unfortunately, because Ponzi
Schemes are unauthorizedand make no profits, you are very unlikely
to recoverany lost investment.Typically the fraudster will vanish
with investors moneyor the scheme will collapse as investors
realize that theyare not receiving the returns they were promised|
67 | Because of non-regulation of investment market, thesefrauds
become rich and the investors poor
5. How to Recognize a Ponzi Scheme1. If you are considering any
type of investment, always remember,if its too good to be true, it
probably is. High returns can only beachieved with high risk.2.
Ponzi fraudster use vague technical jargon to describe their
non-existentinvestments.3. The bankers will try to pressurize you.
Take decisions withpatience and only after checking through all the
documents.4. Resolve any suspicions you might have about the
schemesauthenticity by investigating the company status and
contactdetails.
6. Steps to be taken by Victims1. FSA (Financial Services
Authorities) regulates companies thatoffer investments to public.2.
Call FSA Helpline Number, 0300 500 50003. If you have given your
bank account details to any suchinvestment company, immediately
contact the bank anddeactivate your account.4. Every decision you
make in any scheme, make sure you havewritten and signed
communication with you. Make copies of thesame and keep them with
you.5. Spread about such frauds among other people and friends.AND
THE MOST IMPORTANTACT SMART AND PREVENT SUCH FRAUD ACTIVITIES
