Can you believe it’s been ten years since Bernie Madoff came clean? That his $65 billion Ponzi Scheme imploded, leaving thousands of American who’d trusted him with their wealth and hard-earned savings shaking their fists at the sky.
Big Fraud Continues to Seduce Investors with Too Good To Be True Offers
Well, it seems like ten years may be long enough to forget and let your guard down. At least, that’s what a new report by Investment News suggests. The report tracks the unfolding of several very large investment schemes, including those of Dawn Bennett and the Woodbridge Group of Companies, which imploded in the last few years. Ms. Bennett’s Ponzi Scheme lost 46 investors more than $20 million in just three years. The Woodbridge Group of Companies operation was vast. By the time it was taken down by the SEC last December, the Woodbridge Group controlled more than $1 billion of more than 8,400 investors’ money, many of whom were elderly or infirm.
It just goes to show you two things: that investors have a short memory when they’re put in front of a deal that seems “too good to be true.” And that big fraud is not going away; in fact, if the report is any indication, and if massive amount of wealth controlled by retiring baby boomers continues to tempt fraudsters, we may just be seeing a new beginning. There may be another Madoff just around the corner…
Common Signs of a Ponzi Scheme
Once you're inside a Ponzi Scheme, it can look and feel a lot like a normal investment opportunity, especially if the scheme operator is adept at creating false investment documentation. The key is not to get draw into a Ponzi Scheme in the first place. The most common signs of these frauds are evident from the beginning - that's when you have the greatest chance of identifying them.
Inflated investment returns
Guaranteed investment returns
Tax-free investment returns
Vagueness about the actual investments
Overly simplified investment documentation - or none at all
Lack of true expertise or history in sophisticated investing