
Ponzi Schemes & Fraud
A Ponzi Scheme is a Fraudulent Investment Operation where the Operator, an Individual or Organization, pays Returns to its Investors from New Capital paid to the Operators by New Investors, rather than from Profit earned by the Operator.Unrealistic Returns on Investment Promises
This is the first sign of a Ponzi Scheme. When SA Banks offer Interest Rates of between 5 % and 7 % per annum on Fixed Deposits ; SA Equities/ Shares provide yields of 15 % per annum and Listed Property Securities provide returns of 20 % per annum on average over 20 years - THEN when someone promises you 30 % or 300 % per annum on your Investment - SOMETHING IS SERIOUSLY WRONG ! ! ! DON'T let Greed get the better of you - investigate further !
MORE DANGER SIGNALS LISTED BELOW :
1. When your Investment Capital is Guaranteed. Accepted Principle - High Income > High Risk.
2. When your Return is Always the Same. All investments are subject to fluctuations.
3. When you are told it is Easy to make Fast Money. Investments only grow over long periods.
4. When you notice a Club or Cult-like Atmosphere around certain Key Persons in a Scheme.
5. When only relatively High Once-Off Investments are accepted. Fraudsters like BIG amounts.
6. When you are Pressurised to Invest Immediately. You are told it is for a ' Limited Time ' only.
7. When you are Rewarded for Introducing other people to the Scheme.
8. When your Financial Advisor earns a Huge Commission on the Investment Product. ASK.
Also read the following Article : Investors Need to Wise up to Ponzi Schemes
Related Topics
On March 12, 2009, Madoff pleaded guilty to 11 Federal Felonies and admitted to turning his Wealth Management Business into a massive Ponzi Scheme that defrauded thousands of Investors of billions of dollars. Wikipedia Explore : Bernard Madoff.
A Pyramid Scheme is a form of fraud similar in some ways to a Ponzi Scheme, relying as it does on a mistaken belief in a nonexistent financial reality, including the hope of an extremely high rate of return. Wikipedia Explore : Pyramid Scheme.
How did Madoff do It ?
It has been reported that Madoff’s money management business started mainly with investments from family and close friends. In the early years, Madoff reportedly promised Returns of 18 - 20% per annum.
In the 1980s and 1990s, however, Madoff solicited investments from supposedly sophisticated investors around the world, including investment banks, trust managers, hedge funds and even large charities. Madoff also raised billions in the New York Jewish community, of which he was a member, as well as in several prominent East Coast country clubs.
Madoff’s allure was his promise of steady positive monthly returns and his reports of annual Returns in the 10 - 12% range, even in the bear market which unfolded in 2000. Federal investigators now claim that those reports to investors and prospective investors were fraudulent.
In 2001, the Offering Memorandum ( Prospectus ) for a Madoff-managed feeder fund described his investment strategy as follows : “ Typically, a position will consist of the ownership of 30–35 S&P 100 stocks, most correlated to that index, the sale of out-of-the-money calls [options] on the index and the purchase of out-of-the-money puts on the index. The sale of the calls is designed to increase the rate of return, while allowing upward movement of the stock portfolio to the strike price of the calls. The puts, funded in large part by the sale of the calls, limit the portfolio’s downside. ”
Lessons To Be Learned From The Madoff Fiasco
So, the first lesson to be learned from the Madoff fiasco takes us to the old adage : If something sounds too good to be true, it probably is. At the risk of oversimplication, a stock market investment program that claimed no losing years for at least 17 years, and only 4-5 losing months during that same long period of time, should have made people wonder if it could be true. At the least, investors should have demanded more documentation from Madoff.
CLICK the LINK to the Right to read the Full Article : How the Scheme Worked.
DEFINITION OF ' PONZI SCHEME '
A fraudulent investing scam promising high rates of return with little risk to investors. The Ponzi scheme generates returns for older investors by acquiring new investors. This scam actually yields the promised returns to earlier investors, as long as there are more new investors. These schemes usually collapse on themselves when the new investments stop.
SOME FAMOUS SOUTH AFRICAN - PONZI SCHEMES
1. SHAREMAX - Property Syndication Scam - for more info click HERE + HERE + HERE
From 2008 about 44 000 Pensioners were scamed by 1 376 Financial Advisors. Returns of between 10 % and 12 % p.a. was promised.
2. KRION.
3. FIDENTIA.
4. KING GROUP.
5. LEADERGUARD.
6. HERMAN PRETORIUS.
7. COBUS KELLERMAN - SA's R200 Billion Belvedere Ponzi - to read click HERE
Given his domicile and standing in the financial services community, it is feared that South Africans who trusted Kellermann with their money stand to lose billions of rand invested offshore. The size of Belvedere’s alleged Ponzi scheme dwarves anything to have hit South Africans before. It is ten times the scale of the well publicised Barry Tannenbaum scam.
8. BARRY TANNENBAUM - Anti-Aids Pharmaceuticals Scam - for more info click HERE
2004 to 2009 SA's Biggest 12.5 Billion Investment Scam - over 880 Influential SA Business People involved. Huge Returns of up to 216 % p.a. was promised. Must read click HERE Further read click HERE Further MUST read click HERE Also read : Ponzi House Attached

Barry Tannenbaum
The Ponzi Mastermind now living on the Gold Coast in 'Runaway Bay' Australia and working as a Taxi Driver. He and his associates managed to convince hundreds of prominent business men and Millionaires to invest with them. Read HERE