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Amazing
Shameful Facts On How Easy It Is To Defraud People and Not Get Caught!
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“PONZI SCHEMES” IN A 7 MINUTE NUTSHELL
by
Attorney At Law
He has testified as an expert witness on the subject of Ponzi Schemes.
Mr. Townsend is not only counsel to the unfortunate victims of Ponzi Schemes, he is advisor to lawyers that have clients who have incurred the tragic monetary losses, the indescribable personal suffering and the human indignities that result from the conduct of the sociopath Ponzi Scheme scammer. These fraudsters have no idea of the hurt and vicious harm they cause, as each victim and their family has their own persona horror story that is incomprehensible to anyone who has not experienced it.
[Townsend is the author of “Lawyers Guide: Advising Clients
Who Are Victims of Ponzi Schemes”.]
History of Ponzi
Schemes
The
“Ponzi Scheme” is named after Charles Ponzi who in 1920 perpetrated the fraud
to which his name has been forever since attached.
IMPORTANT NOTE: In
90% of the Ponzi cases High Yield Investment Programs are involved.
So it is important that you understand these programs in order to
understand Ponzi Schemes. See the
website by the author titled “The Mysterious World of Private
Securities Trading”.
How a Ponzi Scheme Works
In its most simple terms, a
promoter of a “Ponzi scheme” takes in investor’s funds and pays the investors
“profits” from the investors’ own money or from funds from new investors. The payment of “profits” to the investors
attracts other investors, as they see an investment that is paying unusually
high returns, and thus there is clear proof right in front of their eyes that
other investors are being timely paid.
Note, these are not really “profits”, because usually no profits are
generated. There is always a
payment of “profits” in a Ponzi Scheme, but only for the purpose of attracting
by example new “investors” (See infra).
How the Ponzi Scheme Fails
The promoter has to obtain
more and more investors to generate more and more cash to pay more and more so-
called “profits” to all the previous investors and the new ones, and this
becomes impossible because there are no investments that exist that the
promoter can utilize to create sufficient earnings to meet this impossible
financial obligation, and the venture ultimately always fails.
The Signs of a Ponzi Scheme
1.
Outrageous Profits. The profits are “too good to be true”, and
you know the rest of the saying. But in
fairness to the victims, profits are only “too good to be true” IF the investor
thoroughly understands how the profits will be generated and unfortunately the
victim never has this knowledge. In
Ponzi cases, the explanation (if any) of the scammer of just how the huge
profits will be generated is either a lie (e.g. high yield investment programs)
or an investment of the type that the fraudster has only heard about but to which
he does not have access.
2.
Payment of “Profits”. In many Ponzi Schemes the
investors are paid “profits”, which usually is the investment money from other investors. Paying other investors is how the promoters
induce other investors to invest. It
is an essential element of every Ponzi Scheme! So when you hear something like, “I’ve been
paid right on time for six months”, that is a sign of a Ponzi Scheme. NOTE: As
an attorney representing Ponzi victims the lawyer will always hear the victim
tell you, “It seemed too good to be true, but I saw with my own eyes someone I
know being paid”.
3.
Excuses for Non-Performance. After the investment has been made, and sometimes “profit” payments
have been made, there comes the time when the payments stop. Here begins the “excuses for non-performance”
phase of the Ponzi Scheme. The promoter
will make some of the most extraordinary excuses as to why there have been no
recent payments of “profits”. He will
often blame it on third parties not performing or on the actions of a
government (e.g. The Patriot Act”).
Illness or an accident in his family or of a third party participant in
the scheme is not an uncommon excuse.
The victim may hear something like this: “The guy with your money died
and it is in the hands of the court in
4.
Refusal to Return Principal. When
a demand for the return of principal is made, there are more excuses followed
by non-payment. The sooner you make the
demand for repayment, (i) the more likely you might be repaid by an astute
fraudster, and (ii) the sooner you will know that you are a victim of a fraud
and should do something about it.
5.
Term of Ponzi Schemes. Most Ponzi Schemes will last
for about 18 months before the “failure to timely pay profits excuses” begin to
run “thin” with the investors, and this leads to the investor’s eventual
acceptance of the reality that there are no funds to pay investors or the
scammer has left the jurisdiction with the funds. However, some Ponzi Schemes have been kept afloat
for many years before their collapse.
One recent case in
Conclusion
If you are the victim of a fraudster that has taken your money
(maybe your life savings) and refuses to pay it back, and you think or wonder
if the fraudster used a Ponzi Scheme to perpetrate this crime, then do the
following: (1) contact a fraud case litigation attorney immediately, and (2)
learn more about Ponzi Schemes and how they work because you are now in the
“business of recovering your funds”, and everyone knows that if you do not
understand your business, that business is doomed to fail; information is
power…always.
NOTE TO LAWYERS AND OTHERS INTERESTED IN UNDERSTANDING AND
TAKING ACTION AGAINST PONZI SCHEME SCAMMERS, you can purchase and immediately
download
Learn More About the Guide PURCHASE NOW