Ponzi Schemes Continue to Beguile Investors
In spite of the massive impact Bernie Madoff had on the American financial imagination, ordinary investors continue to fall prey to Ponzi schemes. The promise of easy money with no risk appears to be as irresistible as ever, which is precisely what fraudsters like recently convicted Ponzi-scheme operator James Hinkeldey of Scottsdale Arizona had been counting on.
Ponzi Scheme Used Seminars, Magazine Articles to Solicit Investors
Hinkeldey is the latest Ponzi-schemer convicted by the federal government of defrauding investors out of their hard-earned savings. Hinkeldey was recently sentenced to more than 30 years in prison for taking more than $18 million from 225 victims through false investment schemes.
According to the US Attorney’s office in Arizona, Hinkeldey and several accomplices solicited millions of dollars in investments for various companies and projects, including real estate, recycling, and land development in Mexico. The solicitations were made through numerous seminars, magazines articles, radio broadcasts, and private offerings. Not only was the information in the offerings misleading and/or false, but the group also promised guaranteed returns on the investments.
Last year, Hinkeldey’s partner, Jason Mogler of Phoenix, received a similar sentence of nearly 24 years for his role in the scam. Both Hinkeldey and Mogler have been ordered to pay restitution to the victims of the scheme.
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
