Why Should You Avoid Investment Clubs?

July 18, 2012 · Posted in Education 

The Ponzi fraud was named after Charles Ponzi who made millions early in the twentieth century by captivating financiers in the USA to part with their money on the guarantee of significant returns. He kept the victims coming by paying returns out of new speculators ‘ funds. The biggest Ponzi crime was committed by New York banker Bernie Madhoff who conned his victims out of 40 bill. He was locked up for 150 years in 2009 but this does not help the thousands of speculators who lost their money. One way the clubs must avoid is some investment fraud lawyers .

Ponzi crimes are often dressed up as investment clubs, offering higher than predicted rates of return to a chosen few who are asked to join. It is astonishing that these schemes continue with all the publicity surrounding the frauds that at last become plain. These are classic frauds of course, depending on the persuasive abilities of the fraudster who comes across as a competent and respectable businessman. A Ponzi fraudster will build trust with his victims. He can select a division of the community where he'll easily establish a rapport. The word will get around that there's a genuine scheme that is paying high dividends and plenty will head to invest. The fraudster simply pays out interest to the backers out of the fresh funds that keep on coming in, thus steadily eroding the capital funds that aren't really invested in the slightest.

At last such a project will collapse – it is inevitable. At some point several backers will choose to withdraw their funds, perhaps becoming suspicious. The pot of available funds for paying interest will no longer be available to imply of healthy investment returns. At this time the fraudster will without doubt try to leave to some offshore location where he has salted away a huge proportion of his takings.

The difficulty is that the full idea of the Ponzi crime is based upon a myth arising after the second World War. Then a little band of charitable speculators banded together to help reconstruct Europe after the devastation. Hugh sums of cash were invested and the returns turned out to be enormous. The funding opportunity was limited to a chosen few and the concept of being invited to an alternative investment market was born. The idea still continues and is exploited by the unscrupulous villains. Nevertheless who knows, there may still be an element of truth in an investment club for the mega rich?

Mark Jenner is a forensic accountant specialising in crime issues. He assists firms and other setups to stop and notice fraud and to recover thieved assets. He is a Fellow of the Institute of Licensed Accountants, a Licensed Crime Examiner and holds a Masters in Fraud Management.

The piece above is all about finra arbitration and finra attorney . The writer is Aina Dolor.


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