What’s a Ponzi scheme?

Better known as a Pyramid scheme, or Multi Level Marketing scheme, a Ponzi is a scam where you’re invited to invest in a scheme which only pays out if you can get others to invest.

There’s no commodity or product – and  you’re not actually producing anything. These opportunities are often dressed up to look like something else and promise that you’ll make easy profits earnings which snowball over time. However, the only people who really make money from these schemes are the people who set them up and maybe a few of the earliest investors.

Ponzi schemes are doomed to fail from the start because the inviduals behind them keep a high percentage (if not all) of the investor money so the system eventually collapses with the vast majority of investors losing everything.

The good news is that the regulatory bodies are getting better as cracking down on these charlatans, but it does still go on – on an alarming scale…

Recently John Anderson and Kenneth Peacock both from the UK were found guilty and convicted of ‘unlawfully accepting deposits from investors’. Incredibly the pair manage to dupe investors out of £115 million.

These schemes are often slick operations which are heavily marketed and can be very convincing. In this case the England cricketer Darren Gough was among the victims. He’s certainly not the first and won’t be the last.

If you’ve come across a scheme online or in the post that you’re not quick sure about, always feel free to contact me via the eZine.