PONZI SCHEMES
Click to edit Master subtitle style 4/24/12
Murtaza Abidi 10672
Investment Fraud
Investment fraud is any scheme or deception relating to investments that affect a person or company. Investment and securities (or stock market) fraud encompasses a variety of illicit activities and strategies, which generally include the deception of investors or the misrepresentation by capital market participants.
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Types of Investment Fraud
Ponzi/Pyramid Schemes Corporate Fraud Accounting Fraud Insider Trading Microcap Fraud Boiler Rooms Pump and Dump Abusive Naked Short Selling Short and Distort
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Pyramid Scheme
The main characteristic of a pyramid scheme is that participants only make money by recruiting more members.
Nakedpyramid schemes. Product-basedpyramid schemes.
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naked pyramid schemes
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In a naked pyramid scheme, no product is sold. Here's how it works: One person recruits 10 other people to participate in a "no-fail investment opportunity." The 10 recruits each pay the recruiter $100. The recruiter now tells them to go out and recruit 10 more people to do the same. If each recruit is successful, they'll all end up with $900 in profit from a $100 investment.
product-based pyramid scheme
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A product-based pyramid scheme is the same concept disguised as a legitimate directsalesopportunity. Here's how it works: A distributor recruits 10 salespeople who each pay $500 for a starter kit of products to sell. The distributor gets 10 percent of each starter kit that's sold. The distributor also gets 10 percent of each product that any of his recruits sells, including more starter kits. The recruits are told that the fastest way to make money isn't by selling products, but by recruiting more people to buy starter kits. The people at the top of the pyramid get commissions from everyone in theirdown
Pyramid Scheme
Business proposal
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Pyramid Scheme
Business proposal Business proposal
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Pyramid Scheme
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Business proposal
Business proposal
Pyramid Scheme Money
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Ponzi Schemes
A Ponzi scheme is a fraudulent investment operation that pays returns to separate investors, not from any actual profit earned by the organization, but from their own money or money paid by subsequent investors.
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red flags of potential schemes
High investment returns with little or no risk Overly consistent returns. Unregistered investments Unlicensed sellers Secretive and/or complex strategies Issues with paperwork Difficulty receiving payments
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End of Ponzi Scheme
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Ponzi Scheme vs Pyramid Scheme Money
Participants
Money
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Key Elements To A Ponzi Scheme
Benefits, The understanding, Initial trustworthiness, Investors receive initial return and Communication of success
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Charles ponzi and the original ponzi scheme
March 3, 1882 January 18, 1949 He was born in Italy Ponzi had $2.50 in his pocket when he arrived in US in 1903
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Charles Ponzi Legendary Scammer
Ponzi started business by buying and selling a type of postal coupon (International Reply Coupon) and promised investors that he could provide a 50% return in just 45 days at a time when the annual interest rate for bank accounts was 5%. When it was discovered that Ponzi was paying old investors with money from new ones, his scheme collapsed and he was sent to jail for 14 years. Ponzi ended up in Brazil, where he spent his last years in poverty and sickness.
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BERNARD MADOFF THE WHITE COLLAR CRIMINAL
April 29, 1938(age73) American formerstock broker,investment advisor, nonexecutive chairman of theNASDAQstock market Founder of Wall Streetfirm Bernard
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Madoff 's $50 Billion Ponzi Scheme
There are four notable facts about his operation:
It was the largest (dollar-wise) It was the longest-running (known) Ponzi scheme in history - it went for over 20 years! It was carried out by one of the pillars of Wall Street - Madoff was a former chairman of NASDAQ His victims are some of the most financially savvy and rich people in the world (you need at least $20 million to "invest" with him) 150 years imprisonment and penalty of $17.179 billion
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Bernie Madoff 's Famous Victims
Fortis Bank.$1.4 billion HSBC $1 billion Access International.$1.4 billion Tremont Capital $3.3 billion Union Bancaire Privet:$1.1 billion Mort Zuckerman.Mr. Zuckerman, the chairman of real- estate firm Boston Properties and owner of the New York Daily News Santander.The eurozone's largest bank by market value, said its clients had an exposure of 2.33 billion ($3.1 billion) to Madoff's investment funds
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J. Ezra Merkin.Mr. Merkin, the chairman of former General Motors Corp. financing arm GMAC, is also a money manager at Ascot Partners LLC in New York. Ascot, which
Double Shah
In 2005, a Pakistani high school science teacher Syed Sibtul Hassan Shah went to Dubai. When he came back to his hometown of Wazirabad, Pakistan, he convinced his neighbors to give him their savings, which he doubled in just 7 days, based on a "stock program" that he had learned 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 (about US$880 million) from 3,000 people and was even considered to be the next political leader from the area. He is now in custody and his case is pending. He has paid Rs 8 Billion to the NAB which will soon be distributed to the people who got effected from it.
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Gold Mine International
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Investment of $60 initially. Bonus of $30 on every 3 members brought into the company. They promised to give u $450/day. $3150/week. $13,500/month. $164,250/year. The company sends the money to foreign countries due to this our Economy was also getting effected. Till January 2011 they have sent almost $93 Million. SECP has given the Public warning for this
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CONCLUSION
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In a nutshell, If someone promises an investment return that is unnaturally high or steady, the warning alarm should start sounding. Too lucrative return on investments must be checked properly. The idea is too appealing but one must be careful before investment in such schemes. One should make sure to dig into the companys portfolio as much as possible and check properly with SECP and other regulatory bodies to make sure the company isnt fraud. If the company is claiming to be an international one, then we must check with SECP whether its actually listed an international company with Companies
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