Question

what is Ponzi Schemes, Explain and provide 4 example of ponzi schemes that have occurred and how they could have been prevented. 3 cited sources and 1500 words

Answer 1

PONZI SCHEME:

A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors . Ponzi scheme organisers often promised to invest your money and generate high returns with little or n risk.But in many ponzi schemes ,the fraudsters do not invest the money.insted they use it to pay those who invested earlier and may keep some for themselves.

I'm sure you most all heard some of the ponzi schemes .Here i mension 4 ponzi schemes are as follows'

1.Charles ponzi and original ponzi scheme .:

in this scheme ponzi started a business buying and selling a type of postal coupon and promised investors a 50% return on their money with in 45 days.in this ponzi early investors did get their money doubled and even triple in a short amount of time.at one point of time ponzi took in $1 million in a three hour period from investors.

2.Dona Branca, the peoples bank:

maria branca dos santos,or more commonly called Dona branca,was a poor portuguese women when she would open her own bank in 1970.to make it attractive she promiesed an interest rate of 10% per month,and got thousands of claints to give her their money.this scheme lasted more than 14 years, and during this time she is known as the peoples banker.Dona branca was arrested and sented to 10 yearsin prision.

3.The double shah:

in 2005 a pakisthani high school science teacher Syed sibtule hasan shah went dubai. when he came back to his home town of Wazirabad,pakisthan .he convinced his neighbors to give him their savings, which he doubled in just 7days, based on a stock programme that he had lerned in dubai.words soon spread of the double shah and people began investing with him.in 18 months ,he took in over rs.70 billion from 3000 people and was even considerd to be the next political leader from the area.. when the police arrested shah on charges of robbery in 2007, thousands os people descended to the street to protest against arrest.he is now in custody and the case is in pendding.

4.Lou pearlman:N Sync and N investors pockets:

Usually ,ponzi schemes are run by people you've never heard of before .but in this one is different .Lou pearlman is a famous boy band music mogulwho founded the backsteer boys and N sync.in 1981 pearlman started trans continental air lines travel services,trans continental airlines inc.,and 12 other companies.problem was they existed only on papers.for 20 years he sold shares of the companies to investors and got loans from banks,to the tune of $300 million.to keep up the ruse ,he invented a fake accounting firm cohen &siege and a fake branch of bank in Germany .he falsified tax returns and other financial documents to appearlegit.he was captured and was sentenced to 25 year in prision.

PREVENTION;

1.Be specticle; :if some one tries to sell you on the name of investments with high or immidiate return for little or no risk. it could well involved some short of fraud.be smart if returns are being generated by something you never heard of or in a way that's impossible to follow.

2.be suspicious of unsolicited offers: some one contacting you unexpectedly ,to invite you to an investment seminor,is often a red flag.these are always target elderly people.

3. check out the seller; reserch a broker,company,advisor .and verify the professionalis licenced and look for any negative information

4.verify the investment is registerd; ponzi schemes involve unregisterd investments ,says the SEC .start by asking the person offering the investment;if the investment is not registerd,ask why?and verify all types of securities.

5.understand that investment; if you don't understand the investment then don't put money in those type of activities.there are many online resources are there to know how to invest and when to invest?.so be careful when you invest.

6.report wrong doing; if you think an investment is a ponzi scheme or any other type of scam,or you have been victimized,file a compaint with the securities and exchange commison.,FINRA and your state securities regulator.

3 CITED SOURCES ARE

1.SEC.gov

2. ACFE.com

3. NACVA

These are the 3 cited sources for ponzi schemes.