THREE MORE SUSPICIOUS SIGNS OF A SWINDLE

People who take the time to carefully plan their financial futures are less likely to fall victim to Ponzi or Pyramid schemes as they have more realistic return expectations. The desperation that lures a lot of people into “get rich quick” schemes is due to a lack of financial future planning, such as having to supplement a declining retirement income.

Ponzi schemes can start off as legitimate investment vehicles. But the investment vehicle can degenerate into a Ponzi scheme if it unexpectedly loses money (or fails to legitimately earn the returns promised) and if the promoters, instead of admitting their failure to meet expectations, fabricate false returns and (if necessary) produce fraudulent audit reports.

Here are three more signs that may signal a Ponzi or pyramid scheme:

Under pressure
It is a common tactic of fraudsters to place inordinate pressure on participants to invest. Whether you are being pressured to make an initial investment or encouraged to increase your investment, they want to coerce your decision. Take your time considering investments.

Offshore exchange
Be cautious when considering offshore investments that rely on complex foreign exchange transactions and shifting money across borders. When your cash is transferred to an offshore bank it is outside of the South African regulator’s reach.

Too good to be true
If it sounds too good to be true, then it usually is.

The best protection when making an investment it to engage with a licensed financial adviser, as they are subject to rules and regulations put in place specifically to protect consumers. Remember that no return is ever “guaranteed” in the world of investments and that even the most modest of investments carry some risk.

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Posted in Blog, risk.