What Are the Warning Signs of a Ponzi Scheme?

Ponzi schemes are becoming more and more sophisticated and luring more knowledgeable investors. Once you’ve lost money in a Ponzi scheme, recovering your investment is uncertain, so it’s best if you can identify the Ponzi scheme early.

Even though many Ponzi schemes are ultimately exposed, some go on for years without detection. There are usually indicators that an investment opportunity isn’t legitimate. Read on to learn about the warning signs of a Ponzi scheme.

If you have already lost money, there is still hope of recouping at least some of your investment. Ponzi schemes can be very complex and victims should not blame themselves for failing to realize they were in a fraudulent scheme. The Ponzi schemer acted intentionally and created ways to cloud their activity to make suspicious activity have the superficial feel of legitimacy. Contact the Ponzi scheme attorneys at Silver Law Group to discuss your situation and the legal options available, no matter where you live in the country.

Ponzi Schemes Don’t Correlate Risk And Reward

Most investors understand the principle that higher risk opportunities yield potentially higher rewards. Ponzi schemers will tout their investments as providing high returns with minimal risk. The lack of correlation is a sign that the investment may not be legitimate.

Ponzi scheme returns are often consistent over time, regardless of what is happening in the market. However, returns on legitimate investments tend to fluctuate as external forces impact their sector.

When you are invested in a Ponzi scheme after it has been operating for numerous years, you may have trouble withdrawing your funds or the access to your funds may be delayed without a reasonable explanation. This is a sign that the investment is a Ponzi scheme and at risk of imminent collapse. However, in many circumstances, the financial advisors who promote these schemes offer excuses why the investment is able to perform better than expected or claim to be the professionals at due diligence or otherwise urge investors to rely on their expertise.

Ponzi Schemes Are Not Transparent

Ponzi schemes often involve complicated, intricate investment strategies that are nearly impossible for an investor to comprehend. The scheme’s promoter might claim that the strategy they use is proprietary. Ponzi schemes often involve unlicensed sellers and unregistered securities.

The lack of transparency makes it impossible for the average experienced investor to properly research the opportunity. You are potentially being lured into a Ponzi scheme when the securities, the seller, or both, are not registered with the Securities and Exchange Commission.

Ponzi Schemers Promote Exclusivity And Urgency

Many Ponzi schemers lure investors by creating an aura of exclusivity. You may receive a cold call or letter using flattering language about your position in the community or your business acumen. Sometimes schemers recruit investors solely from a specific community and use the participation of respected community leaders in their sales pitch.

Another hallmark of Ponzi scheme promotion is urgency. They may insist that you invest by a certain date, or the opportunity closes forever.

These sales tactics are red flags. When an investment promoter plays to your ego or a fear of missing out, it is a signal to step back and do more research before handing over your hard-earned money.

Contact Silver Law Group If You Recognize The Warning Signs Of A Ponzi Scheme

It’s human nature to ignore the warning signs of a Ponzi scheme when you’re receiving great returns on an investment. Many victims of Ponzi schemes are shocked when they learn it was all a scam.

If you’ve lost money in a Ponzi scheme, it may be possible to get some of your lost money back. The attorneys at Silver Law Group devote their careers to getting justice for innocent investors who’ve been scammed. Reach out today to learn what we can do for you.