Not exactly a business opportunity, unless you are thinking of starting one yourself, the Ponzi fraud dates back to early last century when Charles Ponzi first brought the idea of using an investors funds to repay investors their interest, thereby seeming to be a successeful business and encouraging new investors, into public knowledge. As an experienced forensic accountant and fraud investigator I am willing to bet that he was not the first to see the potential in dishonestly circulating others’ funds to increase income in an investment fraud that is designed to enrich the perputrators.

Every year we hear of new Ponzi scams that have come to light, perhaps when the schemes begin to crumble when more than just a few investors want their capital back. The biggest recently was the Madhoff affair involving billions of dollars, pounds and every other currency, that had supposedly been invested for lucrative rates of return. But if you check the news archives, fraud blogs and other reports you will see that there are dozens of these scams emerging every year.

Now I am faced with yet another case this week where I am asked to look at the professional conduct of an accountant recruited by the opperators of an investment fund. If the fund was a Ponzi, should the professional have known about it and reported under Money Laundering Regulations to the Serious and Organised Crime Agency in the UK? Should he have known that funds he was holding were proceeds of crime?

Where Ponzi frauds might impact those seeking business opportunities are that there are some web sites and forums that report money investment schemes and promote a measured and careful involvement as a way for making money. It seems that if you monitor these advice forums (at a cost) you will learn of investment schemes that are in their early days and paying out to investors. Therefore if you get in quick, take a few months of high interest on your investment – then withdraw your capital before the scheme folds (as all Ponzis do eventually) you can make a profit. Moreover as there are so many of these schemes, you need only put a modest amount into several, thereby spreading your risk. It all sounds pretty feasible doesn’t it?

But how did I found out about this “secret” investment world? From a victim that had followed this business opportunity for about a year, lost some £40,000 in total using the methods being discussed on the secret forums and resorted to defrauding his employers to try and recover his losses! I was investigating the fraud when I discovered that the motive came from losses to these Ponzi business opportunities!

My work as a fraud investigator and expert accounting witness will undoubtably involve more Ponzi frauds over the coming years and months. Read my blog giving fraud advice and how I approach the frauds I investigate on a daily basis.

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Filed under: Investment scams

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