Ponzi
scheme is a fraudulent investment system that pays investors a long
time from new investors' money later, rather than actual earnings. Ponzi scheme usually invite new investors to invest short-term returns by bidding very high.
Sustainability
of return that were promised or paid Ponzi scheme investment system,
requiring ever-increasing flow of money from investors to keep the
scheme running. ( world trends)The system is destined to collapse because of the income, if any, is less than payments to investors. Typically,
schemes interrupted by legal authorities before it collapses as a Ponzi
scheme is suspected or because the promoter to sell unregistered
securities. More and more investors are involved, most likely it will attract government investment.
While
the system will eventually collapse under the weight of which he
endured his own, Bernard Madoff example demonstrates the ability of
investment Ponzi scheme to defraud individuals and institutional
investors and securities authorities for a long period of time. Madoff variants of Ponzi scheme as a financial investor of the largest fraud in history committed by one person. Prosecutors
estimate the losses caused Madoff of approximately $ 21 billion, if the
thought is that the money invested by the victims. When
coupled with the promise of returns of income (return), total loss of $
648 billion, but the New York court refused estimation methods during
the trial Madoff.
The scheme is named after Charles Ponzi (photo above), who became famous for using this technique in early 1920. Ponzi
moved from Italy to the United States in 1903, is actually a Ponzi
scheme does not create the (1857 novel of Charles Dickens' Little
Dorrit), but the mode to take the money so much that he was the first
person known throughout the United States. Original
scheme based on the theory of "international reply coupon", but soon
diverted later investors' money to support the payment of previous
investors and private wealth Ponzi.Accidentally
entered a Ponzi scheme, even at the last round of the scheme, can be
economically rational if there is a reasonable expectation that the
government or other deep pockets to bail out participating in a Ponzi
scheme. [2]Hypothetical exampleExamples of investment advertisements that promise amazing results in no time - for example, 20 percent in 30 days. Target
investment Ponzi scheme usually to deceive the layman who does not have
a thorough knowledge of financial or investment jargon. Promotion
of the impressive potential candidates dazzling investors, such as the
claim "futures investments are safe and beneficial" "high-income
investment program (High Yield Investment Programs, HYIPs)," "Offshore
Investment." Promoter will then try to proceed with the shares to
investors - which is basically the victim, and take advantage of the lack of competence or knowledge of investors.In
the early stages of its activity, prior information about the spread of
investment, only a few investors are tempted, even then in small
quantities. Thirty days later, the investor receives the initial capital plus a return of 20 percent return. At
this point, investors will have more incentive to put extra money and,
as a positive first impression to spread, other investors took the
opportunity to participate, are tempted by promises of outstanding
results. However, the actual "profit" paid to the
first investors from money invested by new investors, rather than gains
in the real sense.
One reason that the
scheme initially works so well because investors actually paid former
high as promised, they usually reinvest their money. Thus,
promoters who run Ponzi schemes do not have to actually have to pay
very much, they just need to send a report to investors to show them the
amount of income received and continue to keep the money and continue
the deception.
Promoters also try to
minimize withdrawals by offering new plans to investors, which money
will settle for long periods of time in the "pocket" promoters, in
exchange for a higher return. Promoters see the
flow of new cash by telling investors that they can not transfer money
from the plan's first investment into the second. If
some investors want to withdraw their money in accordance with the
requirements of the permitted, the request is usually processed
immediately, this gives the impression to the other investors that the
scheme is healthy and good.
enough cases of fraud wrapped investing, mutual funds,
insurers and others, all due to the investment company uses a Ponzi
scheme and no longer able to pay investors.
1. Promoter, manager or owner will disappear, bring all remaining payments minus the investment money to investors.
2. This
scheme will collapse under the weight of which endured its own, the way
the investment is slow and the promoters start having problems of
payment (the higher the rate of return, the greater the possibility of a
Ponzi scheme collapses). Such liquidity crises often lead to panic, because many people start asking for money, similar to running a bank.
3. External
market forces, such as a sharp decline in economic conditions (for
example the case of Madoff and the market downturn in 2008), will cause
many investors to pull out most or all of their funds for fear of losing
money and falling confidence in the investment.
here are ponzi scheme list
HYIP (High Yield Investment programms)
Money Game (Pyramid Scheme)
Get Rich Quick Scheme
Multi Level Marketing (MLM)
