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Are you inadvertently involved in a Ponzi scheme?

On Behalf of | Apr 23, 2021 | Criminal Defense

It’s not uncommon for Illinois citizens to venture into an investment with friends and family. Unfortunately, sometimes investments are not always legal. If you fall into any of the categories below, you might be involved in an illegal Ponzi scheme.

What is a Ponzi scheme?

A type of white-collar fraud, a Ponzi scheme is an investment scheme where funds are collected from new investors and passed on to existing investors. In order for the new investors to make money, they have to find other new investors. Without a constant stream of new investors, these schemes fall apart.

Signs that you’re involved in a Ponzi scheme

One of the biggest indicators that someone is trying to offer you involvement in a Ponzi scheme is that they promised very high returns with minimal risk. While this might be the investment of your dreams, it’s highly likely that it’s illegal. Most investments do not provide any bit of a high reward for minimal risk. Always remember that high risk means high reward. A second sign that an investment is not an honest one is that it is not registered with the SEC or the applicable state agency that has oversight with respect to these matters.

The last sign that will tell you that you’re involved in a Ponzi scheme is that you haven’t received any sort of paperwork for your investment. All investments should be properly documented with paperwork explaining how to get a hold of those handling the investment. You should never give your money to anyone without getting proper documentation that you did so.

The Ponzi scheme has been around since the early 1900s as a way to con people out of money. These types of investments are strictly illegal and will most likely cause though investing in them their money. If you believe that you’ve been a victim of a Ponzi scheme, you should speak to an attorney about recovering your losses.