Investment Fraud: How to Avoid Ponzi SchemesBy Robert Siciliano August 08, 2012 | 09:00 AMPosted in: Personal Safety, Identity Theft Protection
In response to National Fraud Awareness Week it’s important to bring
attention to the biggest and worst investment fraud of all: the Ponzi Scheme.
Wikipedia defines a Ponzi scheme as fraudulent investment operation that pays returns to its investors from their own
money or the money paid by subsequent investors, rather than from profit earned
by the individual or organization running the operation. Ponzi schemes usually
entice new investors by offering higher returns than other investments, in the
form of short-term returns that are either abnormally high or unusually
consistent. Perpetuation of the high returns requires an ever-increasing flow
of money from new investors to keep the scheme going.”
The SEC has some advice for those concerned they might
get hooked into a Ponzi scheme: Whether
you’re a first-time investor or have been investing for many years, there are
some basic questions you should always ask before you commit your hard-earned
money to an investment.
The SEC sees too many
investors who might have avoided trouble and losses if they had asked questions
from the start and verified the answers with information from independent
Whether you are concerned
with identity theft or considering your next investment opportunity, start with these five
Is the seller licensed?
Is the investment registered?
How do the risks compare with the potential
Do I understand the investment?
Where can I turn for help?
For more information, read Investing Smart from the Start: Five Questions
to Ask Before You Invest
Robert Siciliano personal and home security specialist to Home Security Source discussing ADT Pulse on Fox News. Disclosures
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