AVOID IT
No one is completely immune to Ponzi pitfalls, but there are several suggestions you can follow in order to avoid them. If something sounds too good to be true then it probably is. Listen to your instincts and decline to invest in anything that offers an unusually high return. Maintain a healthy level of skepticism by doing your homework before entrusting anyone with your money. Finally, diversifying your investments will help keep you protected from Ponzi traps.
Wednesday, October 27, 2010
Monday, October 18, 2010
PONZI SCHEMES: INFAMOUS PERPETRATORS - Part 7
ROTHSTEIN’S RECENT WRONGS
Scott Rothstein is a recent case of Ponzi scheme perpetration. Rothstein is accused of covertly running a scam out of his law office where he embezzled from investor trust accounts. As a lawyer at Rothstein Rosenfeldt Adler, he forged documents and funded his philanthropy, political contributions and law firm salaries through a $1.2 billion Ponzi scheme. Rothstein’s scam involved him fabricating pre-settlement structures, which were sold in legal cases for large sums of money. Investors offered Rothstein up-front cash payments that would go towards paying individuals owed money from court cases so they may buy the right to collect the full amount of the settlements later. Under this scenario, investors in Rothstein’s scheme would be guaranteed to receive a minimum of 20% investment returns in as short as three months. When the jig was up, Rothstein fled to Casablanca, Morocco, hoping to avoid extradition. Rothstein had a change of heart and returned to Ft. Lauderdale, FL, in a private chartered jet.
Scott Rothstein is a recent case of Ponzi scheme perpetration. Rothstein is accused of covertly running a scam out of his law office where he embezzled from investor trust accounts. As a lawyer at Rothstein Rosenfeldt Adler, he forged documents and funded his philanthropy, political contributions and law firm salaries through a $1.2 billion Ponzi scheme. Rothstein’s scam involved him fabricating pre-settlement structures, which were sold in legal cases for large sums of money. Investors offered Rothstein up-front cash payments that would go towards paying individuals owed money from court cases so they may buy the right to collect the full amount of the settlements later. Under this scenario, investors in Rothstein’s scheme would be guaranteed to receive a minimum of 20% investment returns in as short as three months. When the jig was up, Rothstein fled to Casablanca, Morocco, hoping to avoid extradition. Rothstein had a change of heart and returned to Ft. Lauderdale, FL, in a private chartered jet.
Thursday, October 14, 2010
PONZI SCHEMES: INFAMOUS PERPETRATORS - Part 6
BERNIE’S BAD BUSINESS
Many news organizations covered and continue to cover the schemes of Bernard “Bernie” Madoff, as they are still unfolding. We are currently aware that throughout decades Madoff built the biggest Ponzi scheme in history. He offered investors the chance to steadily earn a higher-than-average return on the securities he traded, year after year. He would forge documents indicating a securities purchase made months earlier than they were actually bought. Truthfully, the investments made by Madoff were legally and mathematically impossible. Madoff’s scam ran during an economic boom, which was people’s normal sense of skepticism is set aside. Investors were simply blinded by “easy money.” He cheated banks, various nonprofit organizations, funds, celebrities and numerous other individuals out of approximately $65 billion.
Many news organizations covered and continue to cover the schemes of Bernard “Bernie” Madoff, as they are still unfolding. We are currently aware that throughout decades Madoff built the biggest Ponzi scheme in history. He offered investors the chance to steadily earn a higher-than-average return on the securities he traded, year after year. He would forge documents indicating a securities purchase made months earlier than they were actually bought. Truthfully, the investments made by Madoff were legally and mathematically impossible. Madoff’s scam ran during an economic boom, which was people’s normal sense of skepticism is set aside. Investors were simply blinded by “easy money.” He cheated banks, various nonprofit organizations, funds, celebrities and numerous other individuals out of approximately $65 billion.
Wednesday, October 6, 2010
PONZI SCHEMES: INFAMOUS PERPETRATORS - Part 5
RETIREE RIPOFF
Michael Eugene Kelly owned a resort in Mexico and scammed $428 million from senior citizens and retirees. Kelly offered his prey the opportunity to make timeshare investments in Cancun hotels, which he referred to as “universal leases.” With the timeshare, investors received rental agreements that promised them a nice fixed rate of return. Many of the people that invested into Kelly’s scam thought the venture appeared to be solid with a low-risk return so they invested their retirement savings. According to the SEC, “more than $136 million of the funds invested (came) from IRA accounts.” While investors were losing their money, Kelly was buying a private jet, four yachts and a racetrack.
Michael Eugene Kelly owned a resort in Mexico and scammed $428 million from senior citizens and retirees. Kelly offered his prey the opportunity to make timeshare investments in Cancun hotels, which he referred to as “universal leases.” With the timeshare, investors received rental agreements that promised them a nice fixed rate of return. Many of the people that invested into Kelly’s scam thought the venture appeared to be solid with a low-risk return so they invested their retirement savings. According to the SEC, “more than $136 million of the funds invested (came) from IRA accounts.” While investors were losing their money, Kelly was buying a private jet, four yachts and a racetrack.
Tuesday, September 28, 2010
PONZI SCHEMES: INFAMOUS PERPETRATORS - Part 4
PONZI PRODUCER
Lou Pearlman was a name you’d hear quite often during the 1990’s. Not only is he Art Gunfunkel’s cousin, but he is also the former manger of boy band acts ‘N Sync, Backstreet Boys and O-Town. What many didn’t know was that he was also involved in a Ponzi scheme. His Federal Deposit Insurance Corporation (“FDIC”)-insured Trans Continental Savings Program would offer investors a very attractive return to gain their confidence. Much to the investors’ dismay, the scheme Pearlman was perpetrating was neither FDIC approved nor was it part of a savings and loan. This didn’t stop Pearlman from continuing to bilk his investors out of close to $500 million. Pearlman’s plan was to use the funds for three shows for MTV and to build an entertainment complex.
Lou Pearlman was a name you’d hear quite often during the 1990’s. Not only is he Art Gunfunkel’s cousin, but he is also the former manger of boy band acts ‘N Sync, Backstreet Boys and O-Town. What many didn’t know was that he was also involved in a Ponzi scheme. His Federal Deposit Insurance Corporation (“FDIC”)-insured Trans Continental Savings Program would offer investors a very attractive return to gain their confidence. Much to the investors’ dismay, the scheme Pearlman was perpetrating was neither FDIC approved nor was it part of a savings and loan. This didn’t stop Pearlman from continuing to bilk his investors out of close to $500 million. Pearlman’s plan was to use the funds for three shows for MTV and to build an entertainment complex.
Tuesday, September 21, 2010
PONZI SCHEMES: INFAMOUS PERPETRATORS - Part 3
HAITIAN HOTBED
The residents of Haiti became victims of Ponzi schemers in 2001 when outfits referred to as “cooperatives” were offering rates up to 15%. The cooperatives gave the impression that they were government backed. They were quick to become rampant amongst inhabitants. Individuals also felt comfortable since the coops were actively promoted through radio and TV advertisements. Even Haitian pop stars were spokespeople! Unfortunately, it is estimated that residents lost more than $240 million in these scams, which is comparable to 50% of Haiti’s Gross Domestic Product.
The residents of Haiti became victims of Ponzi schemers in 2001 when outfits referred to as “cooperatives” were offering rates up to 15%. The cooperatives gave the impression that they were government backed. They were quick to become rampant amongst inhabitants. Individuals also felt comfortable since the coops were actively promoted through radio and TV advertisements. Even Haitian pop stars were spokespeople! Unfortunately, it is estimated that residents lost more than $240 million in these scams, which is comparable to 50% of Haiti’s Gross Domestic Product.
Monday, September 13, 2010
PONZI SCHEMES: INFAMOUS PERPETRATORS - Part 2
SCIENTOLOGY SNEAK
Reed Slatkin was a co-founder of the internet service provider Earthlink and a Scientology minister. He established himself as a savvy investment advisor for many A-list celebrities and wealthy heads of corporations. Unbeknownst to these individuals was that Slatkin was working out of his garage on a scheme that defrauded these individuals out of roughly $593 million. In order to work his scam, he produced fake statements that referred back to various nonexistent brokerage firms. The Church of Scientology received millions of Slatkin’s winnings; however, in 2000, the SEC caught on to him and discovered that he wasn’t even licensed.
Reed Slatkin was a co-founder of the internet service provider Earthlink and a Scientology minister. He established himself as a savvy investment advisor for many A-list celebrities and wealthy heads of corporations. Unbeknownst to these individuals was that Slatkin was working out of his garage on a scheme that defrauded these individuals out of roughly $593 million. In order to work his scam, he produced fake statements that referred back to various nonexistent brokerage firms. The Church of Scientology received millions of Slatkin’s winnings; however, in 2000, the SEC caught on to him and discovered that he wasn’t even licensed.
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