(215) 792-6676

Senior Investors Beware of Ponzi Schemes; Ponzi Warning Signs

Senior Investors Beware of Ponzi Schemes; Ponzi Warning Signs

//
Posted By
/
Comment0
/
Categories
Important Things to Know About Ponzi Schemes Which Target Seniors

The SEC’s Office of Investor Education and Advocacy and Retail Strategy Task Force issued a warning to senior investors, many of whom have spent many years saving and investing, about fraudulent Ponzi schemes. In a Ponzi scheme, fraudsters use money they collect from new investors to pay existing investors. And what appears to be a return on your investment is actually money from another investor who has been swindled.

Ponzi Scheme Warning Signs
Promises of High Returns with Little or No Risk.

Guaranteed, high-investment returns are the hallmark of a Ponzi scheme. Every investment has risk, and the potential for high returns usually comes with high risk. If it sounds too good to be true, it probably is.

Unlicensed and Unregistered Sellers.

Most Ponzi schemes involve individuals or firms that are not licensed or registered. Even if an investment professional comes across as likeable or trustworthy, research the individual here to determine whether he or she is licensed and registered.

Overly Consistent Returns & Aggressive Sales Ploys

Investment values tend to fluctuate over time. Be skeptical of an investment that generates steady positive returns regardless of market conditions.

Be wary of aggressive sales ploys, such as pressure to buy immediately and persuasion tactics such as offering investment seminars with a free meal. Take your time deciding whether an investment is right for you and don’t give any money until you have confirmed for yourself that the seller is licensed and registered.

For investments that you already have, be suspicious if you have problems getting paid or if you are pressured to rollover your investments. Ponzi scheme promoters sometimes try to prevent investors from cashing out by offering even higher returns for staying invested.

SEC Ponzi Scheme Enforcement Actions

The SEC has brought enforcement actions involving Ponzi schemes aimed at seniors, including:

In the Lifepay Group, LLC matter, two defendants conducted an alleged Ponzi scheme that targeted seniors and their retirement savings. The SEC alleged that the defendants offered investors unregistered promissory notes, telling them that their money would be used for real estate investments that would generate high returns. To keep the Lifepay scam going, the defendants, allegedly, used the money of new investors to pay earlier investors and convinced investors to rollover their investments into new promissory notes for larger amounts. According to the SEC’s complaint, the defendants only invested a small portion of investor money in real estate and stole roughly $1.3 million to pay for personal expenses.

In the Woodbridge matter, the defendants, allegedly, conducted a $1.2 billion Ponzi scheme in which thousands of people invested their retirement savings. The SEC alleged that the defendants employed hundreds of sales agents to advertise through television, radio, newspaper, cold calls, social media, websites, seminars, and in-person presentations. According to the SEC’s complaint, although the defendants claimed that investors would get paid revenue from high-interest loans to third parties, the defendants really used money from new investors to pay returns owed to existing investors. One defendant allegedly used $21 million of investor money for his own extravagant personal expenditures.

Source: Investor.gov

Kehoe Law Firm, P.C.