One of the most common types of scams is the pyramid scheme also known as the Ponzi scheme. Charles Ponzi was a con man`s con. He created the first pyramid scheme at the turn of the 20th century, in the early 1900s. He was so good at his craft that he managed to rip off investors to the tune of $10 million dollars. It`s easy to see how the Ponzi plan seduced so many – he guaranteed a return on investment of 40%. And that`s how pyramid schemes managed to proliferate, even today. The high investment return was just too good an offer to pass up.
Pyramid schemes work because investors are led to believe they will get great profit in a short period of time. It starts with investment money paid by the first customers who receive the guaranteed profit; along come new investors lured by the promise of easy money and the praise of the business arrangement by those first investors. The money secured from new investors is used to pay preceding investors. This pattern is repeated over and over until those high profits erode and the investors come to realize there is no money. The scam artist has pocketed the profit and no doubt moved onto greener pastures. Only those at the top who run the scam make any real money.
Schemes and scams abound in today`s economy. Try to avoid being caught up in some of the common rip-offs:
- Internet Fraud
- Senior Investment Fraud
- Mutual Fund Business Practices
- Variable Annuities
- Promissory Notes
- Prime Bank/High-Yield Investment Schemes
- Insurance Agent Securities Fraud
- Deceitful Broker/Dealer Agents
- Affinity Fraud
