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Ponzi Schemes and HYIPs – Free Money Traps

Ponzi Schemes and HYIPs – Free Money Traps

With the collapse of Bernard Madoff’s 50 billion dollar investment fund, Ponzi schemes are very much in the news. Recently, the FPA investigated CRE Capitol Corporation and the TradeLite HYIP, both of which turned out to be Ponzi schemes. I’ve covered some of this before in my article about managed forex, but since so many people have lost so much money to both classic Ponzi schemes and HYIPS, I thought this style of scam deserved a more in-depth analysis.

Be aware that not every managed forex fraud is a Ponzi scheme. Both Atwood & James and LegendTrader just found different ways to steal money directly from investors without following the typical plan of a Ponzi scheme.

So, what exactly is a Ponzi scheme?

A Ponzi scheme is an investment that provides returns to investors from deposits, not from investing. In a typical Ponzi scheme, investors are promised a fixed rate of return (usually fairly high) allegedly from some form of high return investment. The original scheme was devised by Charles Ponzi and was based on a legal method (at that time) of using international postal reply coupons. The problem was that there weren’t enough of those coupons in existence to cover all the investment money that poured in. Modern Ponzi schemes claim to make returns based on a number of different investment plans, with forex becoming more and more prominent.

When the first person invests, the company makes very sure the investor gets paid his returns in a timely fashion and encourages him/her to tell friends and family about the investment. For example, if Investor 1 invests $10,000 dollars with PonziFx Investments (fake company name – example only) and is promised a 10% monthly return from their “expertly” run investments. If the scammers keep their overhead costs down, they can pay $1000 per month to Investor 1 for almost 10 months without doing any work at all.

This would seem like a foolish way to scam people, but the scammers have a plan. Whether by advertising or just by encouraging Investor 1 to tell friends and family, they get more investors. Everyone is now making a huge return on their investments. Investor 1 is so pleased, that he might take out a 2nd mortgage and max out his credit cards. Now he places a total of $200,000 with the company. He can now quit his day job and collect $20,000 a month. Of course, he’s a nice guy and tells everyone he knows so they can all share in his success. Some are skeptical, but it’s hard to keep doing the 9-5 thing when 3 of your relatives and 5 of your neighbors have all quit their jobs and are making huge amounts of money with no effort.

Incentives to recruit new people can be monetary (cash bonuses and/or higher interest for the investor who recruits others) or more personal. I don’t know about you, but I’d love to be able to tell my family and friends, “Put your life savings with this company and all your financial worries will be solved forever.” if there really was a company that could always return 5% a month or more per month every month, under all market conditions with no drawdown ever. Wow! I’d be the great fiscal hero to everyone who would listen. This is part of how people get drawn in. People want to believe that they’ve found the perfect solution to all their money problems. Sometimes, they are cautious and just put in a little money to test it out. Once they get a few payments, it’s easy to justify borrowing money at a low interest rate to invest it at a high rate of return.

A well run Ponzi can become huge (current world record – $50 billion), but at some point, it has to end. Either the supply of new investors runs out or the authorities step in – assuming the scammers haven’t already decided just to grab the money and leave town beforehand.

Ponzi Warning Signs

1. Many large promises are made about the skill of the traders or the special trading or investing method (could be forex, could be anything), but details are scarce. Trading statements (if any) are unlikely to give information on what brokerage was used to place the trades. Attempts to get details will be gently deflected. Any serious attempt to get details is likely to result in the scammer threatening to not let the potential investor take part in the investment plan.

2. A web search for the people in charge of the company reveals little or nothing about them, despite claims of having long and successful careers managing other people’s money. Worse yet, the search may show some civil and criminal legal difficulties, but these will be explained away as “misunderstandings” by people who didn’t understand the business. Most of the positive info available is by word of mouth from friends or relatives who have invested.

3. The company will often try to claim that it has a long and solid history, often on Wall Street. There might be a virtual office in New York. There may or may not even be a very nice local office. Asking for information about registrations with the CFTC, NFA, BBB, local, or state authorities will be turned aside, either with excuses about how this isn’t necessary, or with threats to keep anyone who would not take the investment seriously won’t be allowed to invest.

4. An investor who wants to take some time to consider the investment will often be pressured to place money as soon as possible. Of course a legitimate investment manager will want your business soon in order to collect commissions, but excessive pressure to invest now can mean that the scammer is getting short on cash to pay off prior investors or else is getting ready to run off and wants as much money as possible before disappearing.

A serious investor needs to apply logic. Any legitimate company will be very happy to provide information about which regulators, government agencies, and business groups they belong to. Anyone who asks for your money and says that you aren’t entitled to get a full disclosure about the company and how the investments will be handled is either a criminal or a crazy person who thinks that normal rules of investing don’t apply. Anyone who threatens not to accept your investment money if you require basic information about the company is a criminal. The company my IRA is with sends me way too much info about my investments and they are happy to answer any question I have by email or phone. Investment companies should want to give you info, not hide it. Any serious managed investment company that claims to have a long, solid track record will be easy to look up online. Lack of bad information is not the same as the presence of good information. Just because your Aunt Mildred has been getting 10% per month for 6 months is no reason to throw all of your money in without researching the company first.

One special note about the Madoff case. He got a lot of very big names to invest in his scam. He even managed to slide under the CFTC’s radar many times when they checked his company (yes, he really was registered with the CFTC). The reason he got away with it for so long is that he only offered 10% per year. This made his company seem a lot less suspicious, so many investors as well as investigators didn’t examine his books as closely as they should have. Still, some smarter investors who checked things out closely did avoid getting involved.

One other thing about Ponzi schemes. Those who get in early and who don’t add to their investment can end up with a significant profit. So, do you think it’s ok if you got in early enough to have recovered your initial investment and made a profit? Think again. In the Madoff case, the authorities are working to recover any profits made by early investors to help partially repay the losses of later investors. Just because an investor didn’t know it was a criminal enterprise doesn’t mean that the investor can profit at the expense of others. Also, there’s almost no way to predict when a Ponzi will collapse, so trying to invest with the plan to profit before the scheme fails is dangerous and foolhardy. Knowingly taking part in such a scheme can also attract quite a bit of attention from the authorities and other investors after the scheme falls apart.

Free Money from HYIPS?

HYIP stands for High Yield Investment Plan. I can’t prove that they are all Ponzi scams, but am willing to bet that at least 99% of them are. Some HYIPS have FAQs claiming that they aren’t HYIPS, so let me explain some of the more obvious warning signs that something is a HYIP.

HYIP Warning Signs

1. The website will often go on and on about the company having a large team of experts in a wide variety of fields, but when you check the services offered, it’s usually just a set of 2-5 “Plans” paying interest in a daily/weekly/monthly basis for anywhere from a few days to 12 months. Sometimes the interest rate is fixed, sometimes it’s listed as a maximum or minimum. It’s always far more interest than can be had from any legitimate investment. The alleged investment can be just about anything, but forex is very commonly listed. Some of them have names like Real Online Forex, but are just real online scams.

2. A very steep increase in daily/weekly/monthly return as the amount of investment increases. I’d expect to make a little more interest with a legitimate account manager if I place $100,000 instead of $1000, but not somewhere between 2 and 10 times as much. Many also pay investors a percentage to bring in other investors.

3. They usually only accept deposits via one or more e-currencies (Liberty Reserve, e-Gold, StrictPay, etc.), not check, credit card, wire transfer, or anything else easily traceable. Those few that do offer wire transfer almost never have the money sent to a bank in a country with strict regulations. I’m completely in favor of offering a variety of methods to fund and get paid back on investments, but when all of the funding methods are virtually untraceable, this is not a good sign.

4. Minimum investment amounts are typically very low – almost always under $100 and sometimes as little as $1. This is done to lure people in and pay them some huge percentage of profit in order to convince them to invest larger amounts and tell their friends about it. Some people have lost hundreds of thousands when a HYIP disappears.

5. There is usually little or no contact info on the website. Contact is typically only by a web form or an email address. This might be fine for a low-cost or free service, but not for some place that claims to be investing significant amounts of your money.

Try to think about this logically. Some of these HYIPS promise over 5% interest per week. Take a moment to do the math. Even uncompounded, that’s over $250% per year (5%, 52 times). Compounded weekly, that would be over 1000% per year. If this was all there was to investing, why isn’t anyone talking about how great it is in the financial news? These things are very easy to find on the web, so they aren’t secrets. Do you really think there’s a service that gives away virtually unlimited free money with little or no risk? If these really work, why didn’t Bernie Madoff just place a small percentage of the money he had into them and fix the problem he has paying off his investors?

Some people play what I call HYIP games. There are HYIP rating sites that tell if HYIPs are paying out to investors or not. Some of these sites are honest, but many are owned by the HYIP companies and are completely fake. Those who play HYIP games look for sites that are fairly new and are currently paying out while trying to lure more people in. They invest modest amounts and try to recover their initial investments as quickly as possible. They leave some money in and try to get as much as they can from the HYIP before it collapses and takes all the remaining money. Sometimes they lose everything, but they can make enough on the profitable ones to have at least a chance of coming out ahead. Personally, I consider this to be unethical. Every dollar placed with a Ponzi scheme makes it possible for that scheme to continue a little longer and steal more money from more people. Those people looking for that “golden moment” to put money in, grab some cash, and get out with a significant profit are only assisting the criminals and taking money from others who still are falling for these scams.

Take action and save yourself from these scams

In conclusion, keep your eyes open, ask a LOT of questions before placing even 1 dollar with a company that you suspect might be running a Ponzi scheme. Don’t let a desire for high returns cloud your judgment. Don’t place any money with anything even resembling a HYIP, and be very cautious before turning your money over to a person or company that claims to be able to produce stable high returns.

I’ve said this before and I’ll repeat it here. Do some serious research before placing money with an account manager. There are people out there who will spend more time checking out the features of a new TV or stereo system than looking into an account manager or investment funds manger before handing over their life savings. If it takes you a whole month to check out a company, the worst thing that happens is that you’ve lost one month of lucrative returns. If the company turns out to be a scam, you’ve given up nothing and saved all of your money. If you don’t have the time or skill to investigate, spend some money and pay someone to do it for you. You may end up spending a couple thousand dollars, but could save your entire life savings, your home, and more.

It’s your money. Invest it wisely. Learn to trade for yourself or else do the research needed to find a suitable investment plan. Most of these scams are easy to avoid if you know what to look for.

Author Profile

Pharaoh

Pharaoh

Pharaoh is one of the FPA's oldest members (he claims to be about 4000 years old, but we think he's exaggerating a little). He says he created the world's first trading pair (Cow/Goat) while ruling ancient Egypt. Although there are no archeological or historical records to support this claim, we can't find anything to disprove it. Although he's not as active at the FPA as he used to be, he still holds the highest post count of all FPA members.

We don't understand how he does it, but Pharaoh has an uncanny ability to spot scams faster than anyone else we've seen. He claims to have known a number of companies were HYIP scams just by their domain names and that each time an examination of the website proved him right. He's also famous inside Forex Peace Army for warning about Ponzi schemes, even ones run by large and well established companies. He's been in a number of threads trying to warn people away from active Ponzi schemes. In spite of the efforts of shills and those gullible enough to believe in free money to discredit his words, he keeps up the warnings. In each case, the company ended up either disappearing with all client money or being shut down by the authorities.

In addition to investigating scams, Pharaoh has written a number of articles on a wide rage of trading topics, including forex broker selection, risk management, and how to select a good account manager. He's also covered other items of interest to traders, such as protecting wealth and purchasing precious metals.

Pharaoh claims to be a business consultant, but says he makes most of his income by running a globe-spanning hamster smuggling operation. If we are to believe him, he's currently working on a network of hamster tunnels under southern Europe.

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Comments

sweetjessica
9 years ago,
Registered user
Dont be a victim

Very good advice and wise words from the Pharaoh,:confused: Remember the old Saying "Look before you Leap":nerd: Always pay attention to the Master Sergeant he did not get his stripes for being foolish with your $
Just1ForexMan
9 years ago,
Registered user
Good information

This is an informative article. It should be known that it requires a tremendous amount of research time to uncover the 1 or 2% out there that are legitimate. Its safe to say that you would have to spend at least 8 hours a day for months before you find just one or two that will be around for more than a few years. How do I know?... I'm a journalist and its what I do for a living (research that is). My writings are only translations and summaries of the information which is there for anyone to find. Given they have the time. Investing is as intoxicating as new love; but remember, its not easy. If it were everyone would be wealthy and in love. You never know it unless you try it. Research is invaluable. Always due your due diligence; Forex Peace Army is a great place to start. Good investing.
MasterTech
9 years ago,
Registered user
HYIP And Autosurf Scams

Yet another good, fair warning to anyone who may be considering investing in an HYIP or Autosurf. I would, however, disagree with the "99%" figure: 100% of HYIPs and autosurfs are Ponzi scams! I, personally, have been researching these con games for months in parallel with the most infamous promoter of all, Money News Online. This site supposedly "reviews" HYIPs and autosurfs on a daily basis. On a DAILY BASIS?! YES! I think that his site ought to be called review of the latest "scam-du-jour"! In my opinion, the site admin. is probably the "ring leader" of a global network of Ponzi scammers who create hundreds, if not thousands, of new, prefabricated HYIP and autosurf sites every day using variations of readily available (and relatively inexpensive) HYIP and autosurf templates from outfits like Goldcoders scripts, etc. It's pretty transparent to me that he makes his money from advertising and endorsements of the HYIPs and autosurfs that he supposedly reviews thereby avoiding having to invest any real hard-EARNED money of his own, not to mention all of those lovely "referral bonuses". It just angers me that he seems to feel absolutely no remorse for promoting such obvious scams; nay, he feels that he is actually doing potential investors a SERVICE by providing "honest" impressions of newly introduced "programs" (scams). Of course he rationalizes his fraud promotions by saying that everybody KNOWS that HYIPs and autosurfs are Ponzi schemes, and that one shouldn't invest any more than one can afford to lose!
So...he speaks for EVERYBODY?! Thank God for sites like Forex Peace Army! I defy anybody who reads this post to name a SINGLE, legitimate HYIP and/or autosurf investment "program" that is NOT a Ponzi, and can provide irrefutable proof of the program's authenticity and legitimacy.
Pharaoh
9 years ago,
Registered user
> Yet another good, fair warning to anyone who may be considering investing in an HYIP or Autosurf. I would, however, disagree with the "99%" figure: 100% of HYIPs and autosurfs are Ponzi scams!

Note that I said "at least 99%". :D


> I defy anybody who reads this post to name a SINGLE, legitimate HYIP and/or autosurf investment "program" that is NOT a Ponzi, and can provide irrefutable proof of the program's authenticity and legi..

I'd actually also be interested to see any proof of such a thing. I'd want proof of real investments and payouts over a period of several years. I share MasterTech's skepticism about getting such evidence.
ritz
9 years ago,
Registered user
Ponzi schemes and Hyips

good job master sergeant.....scheme likes these must be exposed to public
Dispicable
9 years ago,
Registered user
Wow!!!!!

Excellent article! Everyone intrested in investments should read this simple and logical report.Common sense should have taken care of it ,but it just goes to show that when it comes to money, people instantly loose their intelligence too greed; i.e. traders failing to trade profitably for example.
omo9ja
9 years ago,
Registered user
Well said sarge, whoever has ears let them listen; Whoever has eyes let them read and understand.
lot123
9 years ago,
Registered user
time na money

lazyness na sickness make ur money now my brother
be wise in forex e no be for greed person
a word is enough for the wiseman so gud luck or lucky
na me lot123:ooh::D
bluesea46
9 years ago,
Registered user
Ponzi Schemes and HYIPS

Pharaoh...I'm sincerely impressed with your eloquence, writing style, amount of your private time taken to write to this forum and your deep sense for fairness I can read in your articles. Thank you.

When I remember my first visit of HYIP site few months ago, I was astonished with the possibility that I can be ...an investor :). It looked back then like a highway out from 9-5 work to complete freedom. After very short research I found "HYIP monitor sites". Most are very convincible. What a dumb ass I was. There was a smell of fraud and scam all over the place...but I was hypnotized.

Then I've discovered "payment processors". The facts they come and go, and are off shore registered didn't bother me nor the fact that 95% of their merchants are HYIP programs. The magnet force caused by possibility of earning 25-50% per month was to strong.

My first “investment” was in so called managed forex account led by the guy called Richard Falk. Of course it was scam. But I remember that I was 100% percent sure it was not, back then. After that I quickly discovered a world of “autosurfs”. My thinking was if I join the program following the link from “monitor site” that my chances for earning profit are good. Actually, I was even payed few times and reinforced in my “investor” beliefs. But…they all had gone and are replaced with new ones.


You see, when opening an account at any payment processor there is a procedure in which an account holder should send scanned ID documents prior to account opening. Therefore I thought that all of us had identified ourselves to certain payment processor management, which would eventually prevent any fraudulent activities within those accounts. Dumb and naïve ass I was.

I was told that there is no way for them (Perfect Money in my case) to reveal true identity of any account holder, no matter which proves I can give, and that only way to undertake any legal action is to write to the court in Panama, where apparently many processors are registered. Basically, the setup is made which clearly protect all interested parties in these fraudulent activities.

Places like this one, FPA site and people like you are giving hope to all naïve and dumb asses like myself, that someday all this scam will come to the end. Thank you once again.
bluesea46
9 years ago,
Registered user
> Yet another good, fair warning to anyone who may be considering investing in an HYIP or Autosurf. I would, however, disagree with the "99%" figure: 100% of HYIPs and autosurfs are Ponzi scams! I, pers..

This was the site I thought about as genuine one first time I saw it. I've thought at first glance how professional he was. After losing my money I decided to take a closer look and gone through all the archives. I don't know about his involvement in creating a network of HYIP sites, but yes, I think as well that he’s 100% aware what is he doing and feel no remorse about that.

If any new HYIP scammer would like to attract new members rapidly, all he needs to do is submit his new program for review at MNO. Then take an “interview”, and that’s all. For every new HYIP program there will be few hundred of newbies as affiliates, meaning profit for both HYIP program and MNO monitor site.

The fact that he uses particular lingo for making reviews is very misleading for anybody inexperienced and new to this games. You actually get a feel that all this scam is legitimate business and it doesn’t take much time for you to become an “investor”. He even put real “whois” data for the site. Question is though, is he doing any criminal activities, cause he openly writes here and there about real nature of HYIP games. Very sophisticated, indeed. And with no remorse for you or me or anybody else. Money is all he cares about.
berolina
9 years ago,
Registered user
Agree, great article - once you read such article, it becomes obvious, that such "investments" are just to good to be true and a typical investor in such schemes is just ignorant of true market mechanics, which are not enabling such profits ...
thanks for posting!
Sheryl Anne
9 years ago,
Registered user
Great ADVICE !

Great advice Msgt ! I lost 7.2k in Mutual Forex Fund. com. Their site has just disappeared. Your advice rings clear and true, I think it is time to trade Forex on my own, but first, I need to learn how, this is why I am here. Thank you so much for your post !

Sheryl Anne:)
vans22
9 years ago,
Registered user
:):)

Yet again Thank you Pharaoh for this advise / warning that you posted here.
This will be beneficial for me and for every newbie like me.:D
cardy
8 years ago,
Registered user
Not all investment programme are scam

I have been researching and investing in those programme where they share the intirest on basis of their daily profit.Those companies were doing fine not only that its really possible with those company to share the profit for their investor on daily basis.They even support via phone or live chat.Of course their profit sharing may not be to hight but monthly profit sharing is always more than 30 - 40 %.Its enough.....
Pharaoh
8 years ago,
Registered user
You can get a savings account at some banks that gives you interest paid daily. Daily payment is just a minor caution flag. Daily payment of crazy interest rates that are far above and beyond rational levels is an almost certain sign of a scam.

Any super-high return investment is either risky, a scam, or both. If you don't believe me, look through the FPA's Blacklisted folder. There are a number of Ponzi schemes and HYIPs there. All of them lured people in with big promises. Some even paid a lot of money for awhile. A couple had defenders here in the FPA's forums. None of those defenders ever posted again after the authorities shut down the scams.
e.merchant
8 years ago,
Registered user
Hello to everyone, this is my first time in FPA forum. Nice to see many good people here. Thanks Pharaoh for your advice:) this thread is good information for newbie like me. I will stay away from HYIP site.
jtfx
8 years ago,
Registered user
You dont win with PONZIs!

You can however play the game available at FACEBOOK.

This game will waste your time though....
amirulamar
8 years ago,
Registered user
Not 100% HYIP a SCAM

Hello FPA
I'm involve in this HYIP or online investment almost 3 years ago..
I lost lot of my money to scam,
But in a time a found 3 online investment program which still make profit to me
now I'm glad that I'm join in this battlefields
all my lost money are return back to me and now I can quit my job at any time if I wish!!!.
Thanks to the HYIP program ( which really HYIP).
Pharaoh
8 years ago,
Registered user
I see from your other posts here at the FPA that you've been ripped off by at least 2 HYIPS already. There is no free source of money in the investment world. If you are getting money from other HYIPS, that's because they haven't shut down and stolen all the money yet. By placing money with "currently paying" HYIPs, you are helping those criminals keep their scams running so that they can lure more victims in.

If you have money with one, pull it out immediately. At least that way you might exit with profit an won't be helping them steal from others.
Kakaki
8 years ago,
Registered user
Two diseases are indicated here. #1 ignorance, #2 greed.
Ignorance, from lack of requisite education or lack of exposure to the critical happenings around you is what this article can cure. Greed on the other hand is almost incurable. The scammer is greedy and the ‘scamee’ before he got scammed thought he was having a field day.

I hope those you delight in get rich quick methods will read and be enlightened
eduj
8 years ago,
Registered user
Re: Hyip

Thank you for this beautiful peace on HYIP. I almost fell for it. Thank God to this forum for its education. Although am new to this forum and new to forex trading but I have been reading books on it and trying my hands on practice account. With this forum, am sure I will learn more. But my problem is am not familiar at all with news trading. I hope I will learn with guidance from here.
Carlos Negron Montoya
7 years ago,
Registered user
Thanks

Thank you very much for the advice about Managed Accounts, HYPS and Ponzi Schemes! I definitely wouldn't trust in any "managed forex" account that "promises"or guarantees any profit, but anyway the posts were very useful.
I'm happy that there are too many good persons in the world as the managers of FOREXPEACEARMY and the Master Sargeant "Pharaoh", that make an effort to inform and warn people about everything in Forex.

In fact, there was a sort of great Ponzi Scheme here in my country, Peru, in the early 1990's. A felon called Carlos Manrique, founded a, HYIP called "CLAE".
Here the link (I regret it's in Spanish):
ojosquesiven.blogspot.com/2007/09/manrique-el-cheverengue.html

Thank you so much!
MAHESH PRASAD H
7 years ago,
Registered user
punish all

Hi,Itried many ponzi and autosurf,HYIP'S all are fradulent people including these E wallet people,mainly this scam happens because of E-wallets.
OneMillion
7 years ago,
Registered user
I got caught up in a Ponzi years ago. Pinnacle investment partners. Lost 100K I got back about 38K
Nerdie
7 years ago,
Registered user
Promises, promises: Fantasy vs reality money

Hi Pharoah,

Thankyou for writing these articles. Investment can be so treacherous.

this is a brief account of an investment history where the investor is interested in knowing if they can seek compensation for what has turned out to be fantasy money.

Fund manager approaches the investor about Investment A. The investor was inexperienced and knew the fund manager well and trusted his judgement based on previous dealings. The investment showed good rates of return based on figures provided through a forex trading system. $10,000 invested.

Fund manager monitors Investment A and decides the risk is too high as the software is not performing to expectations. Fund manager puts fund into Investment B temporarily, issuing revised projected figures (down $21,000 over 2 years investment). Fund manager intends to put fund into Investment A when it is more reliable. Investor adds $10,000 to the fund, making a total investment of $20,000 with a view to living off this investment in semi-retirement.

Fund manager continues to monitor Investment A and moves fund to Investment C. On request issues a statement of income per annum consistent with last lot of projected income figures. Investor refinances family home doubling size of loan at low interest rates to do further renovations, secure in the belief that the income from all investments will cover repayments easily.

A year on from original investment investor has no further updates on figures. Requests annual statement for taxation. This is a problem. Fund manager does not know why investor needs a statement at all!
Investor requests withdrawal of income. This is a problem as well. Need a special overseas bank account. Investor suspicious.
Investor continues to request accurate figures on investment for "reality check". Investor worried - requests to withdraw all funds now. Not done.

Fund manager needs more time to do calculations on fund figures. Investor offers to do them for him!

Investor decides there is definitely something going on and thinks it is safer to assume the money has been lost and to plan accordingly. Investor puts off all staff in small business and closes down, cuts costs to survival level and focuses on getting used to change in circumstances, tight budget, new job somewhere, all with large amount of debt. Bleak prospects as investor planning for transition to retirement due to age.

Fund manager advises he has moved fund to investment D. Staff were supposed to send PDS to investor and didn't. Eventually after repeated requests investment statement arrives in post with copy of Investment D PDS.

At least the capital has been preserved. Small ROI after administrative fees taken out by manager. Investor disputes fees, as these were covered in initial investment arrangements and three months up front with no ROI. Investor unsure whether fund manager put them back or not.

Expected asset value at time statement was issued: $200,000 based on documentation.
Actual asset value net of fees: $22,000

Investor still waiting for capital plus interest to be redeemed. Investor will only deal with fund manager in writing as fund manager said he told investor in conversations the situation and investor must have totally misunderstood on several occasions. Investor wants everything in writing to study what is actually being communicated as investor has no hearing problem and speaks and understands fluent English.

Apparently Investment A still exists and is still being monitored by fund manager and it does exist.

So does the investor have a claim on the providers of the original figures? That seems to be where the original HYIP occurred.

Or should the fund manager claim against the providers of HYIP on behalf of the entire fund of investors?

I've told the investor not to feel badly about being sucked into this - she's not alone and has now wised up to the risks of investments that don't provide statements for tax returns for her own peace of mind. Also to the "promises, promises", "guarantees" and licenced and registered financial practitioners.

She's looking for a new career start, something she can do from home which is solidly based in real money and legal taxwise. She's shattered by her experience and will probably sell or rent out her home to alleviate the debt burden. This is an all too common story.
Pharaoh
7 years ago,
Registered user
That's one hell of a story Nerdie. Too bad it happened to you and happens to so many people.

It may be a HYIP. It may be a Ponzi. It may be an out and out deposit-only fraud from day 1.

There's no easy way to tell where your funds are. Filing formal complaints against all the entities involved, starting with the guy who lured you in is your best option. Every company that allegedly had your money owes you statements for tax purposes or else need to provide you (and the tax authorities) with information showing that they didn't have your money.

Speaking of tax authorities, they might be good to send after the guy who lured you in. Tell them that your fund manager accepted money, may have even been paid fees out of your money, and can't even tell you where your money is or how much you've made/lost on it.

Remember, Al Capone wasn't sent to jail for being the most notorious gangster of his era. He was locked up for tax evasion.
Nerdie
7 years ago,
Registered user
> That's one hell of a story Nerdie. Too bad it happened to you and happens to so many people.

It may be a HYIP. It may be a Ponzi. It may be an out and out deposit-only fraud from day 1.

There's n..
Thankyou, Pharoah.

Love your work :)

I gather the Fund Manager was scammed too as he believed it was true after his investigation of the whole deal. He lost out big time as well.

The information sheet said Phoenix Programs and maybe Hawkeye was in the mix somewhere. "Unlike shares, you get paid whether it goes up or down" sounds like trading.

I'm onto it :)

A lot of Aussies and Kiwis need to read the work you and the rest of FPA have done in this area. I'm looking at how I can increase the opportunities for them to get on the page with this area of crime prevention.

FPA have the best and most reliable information I have read anywhere. We need real indentifiable cyber crime investigation organisation, like IC3.gov I've sent them a report on another matter in my "professional" capacity. Victims of financial fraud and complex cyber crime must be taken more seriously.

Nerdie
Pharaoh
7 years ago,
Registered user
Then again, doesn't a fund manager have an obligation to perform proper due diligence. Maybe he's really a victim too. Maybe he's crying about having been ripped off while he's really enjoying spending your money.
Nerdie
7 years ago,
Registered user
> Then again, doesn't a fund manager have an obligation to perform proper due diligence. Maybe he's really a victim too. Maybe he's crying about having been ripped off while he's really enjoying spend..
I've looked for information on Fund Managers on the net. The Fund/Trust is in New Zealand. The friend who introduced the investor to the fund manager implied there was some reason not to trust him, despite his being the friend's accountant, which doesn't make sense to me. I like to be able to have some trust in my accountant, even if I have to tell them what to do occasionally from within industry information.

My instinctive reaction would be to get out of the fund asap and create a large distance from all of it. The investor got a hard time because she wouldn't play ball on the tax avoidance and overseas bank account matter. They're crazy as ASIC are onto the 15% tax on NZ Trusts vs 30% tax on Australian Trust. Surely all it would take is for one of these fund investors to put in their tax return in Australia for the whole thing to blow up? The argument is that this is offshore investment and Australia seems to have some sort of deal with NZ on this.

The last thing anyone would want here is to get a bad record with the ATO as they create so much extra work and expense for people and businesses through increased audits and disruption to business time.

I'll see what else I can find out about Fund Managers. Sounds like the AFSL all over again? These positions involving trust with other people's money seem to be handled rather loosely - hence the need for sites like FPA to do the work of the regulators. Unfortunately most of the information comes in after the adverse event.

Getting the word out as much as I can about this site. It's pretty much all we have in the way of reliable information. Even if an accountant or solicitor evaluates a PDF - usually negatively to be on the safe side - the onus is still on the investor to make the final decision.

Caveat emptor indeed
Nerdie
7 years ago,
Registered user
Maybe what the investor needs it to get a suitable amount of money, find an honest broker and an honest and experienced trader that can be trusted and rebuild her financial backup of cash reserves. I wonder if this would work better than putting it into blue chip shares on a reinvestment program with the tax credits inherent in this strategy? That's one for a good financial planner, I guess.

They should be teaching this financial intelligence at school! It's a whole lot more useful now than expertly analysing a Mozart sonata :)
Nerdie
7 years ago,
Registered user
Ethical in Business Report

I have just read KPMG's excellent report on ethics in business.

I am wondering if any further research has been undertaken following on from the ground gained by this report?

One outcome of my witnessing the consequences of unfair treatment by businesses who abdicate their responsibilities to investors through "normal" legal indemnity and other disclaimers is my private research into how this could occur within the Australian regulatory framework.

The answer: Easily - and despite the hue and cry it is still going on !

Unfortunately the regulatory framework seems to be either overworked or undercommitted - or both - to the prompt resolution of individual complaints. This combined with the naivete of investors and the inability of so many to complain effectively results in considerable lost time before action is taken against the real perpetrators of unfair practices and the possibility of their being officially held accountable for their actions.

As the attached report states

> "Politicians and the media love to see issues as having a devil, a victim and a hero. Real life is never that simple."

- "A View from the Top" - KPMG Report into Business Ethics and Leadership - 2006

In Australia ASIC and other regulatory bodies need to be seen as the "hero" to justify their government funding. Under the current AFS licencing system a "devil" can be found who may not be fully to blame for the issue. At the end of the day the "victims" are unlikely to receive proportionate compensation as the time lag allows the real devils to go "bankrupt" or escape financial or retributions to the full extent of the crime. The world is a big place and there are ample places to live off their ill gotten gains for the rest of their lives, as we have seen in the Christopher Scase matter, just to name one high profile "devil" who got away.

It is no surprise that the ordinary Joe or Josephine would have little or no confidence in what they perceive as "big business" and the capacity of government to protect them against unfair business practices. Worse still investment is regarded as a gamble for those who can afford to lose their money, with no guarantees or real protection for investors when push comes to shove. Regulations fail and litigation is expensive. Bottom line, it is the buyer beware, everytime.

I can see the rise of the reputational model of grass roots regulation within Australian culture, beyond rumour and abusive comment on sites where victims post to vent their frustrations. The next wave will see the popularity of well-moderated apolitical mainstream public comment on the ongoing failure of business and government to deliver to societal expectation and the boycott of products that appear from businesses "known" to exploit and rob. It will take time for the best of these to gain traction as reliable sites for informed decision both within Australia and beyond.

I am on the hunt for a cross sectoral ethical business or trading organisation in Australiasia. I think the market sentiment in these coming times calls for such an organisation if it does not exist already. In tougher economic circumstances those who don't put their hard earned dollars under the mattress deserve some assurance that their investment company has gone to more effort than mere regulatory compliance in order to conform to real ethical standards. And again, the public are cynical. There must be more than "greenwash" and the overt display of a charity on the company website ("cause" marketing) to convince me that this business has a track record for consistently resonating with my values on accountability, honesty, fairness and responsibility. After all that's what I expect of myself in business and what ASIC or the ATO would expect if they decided to drop in for a visit. I have learned now that I can expect that standard from business or take my money elsewhere as there are real, viable options for informed, discerning, ethical investors.

So take the "Code of Conduct" off the wall, the fluffy "motherhood statements" about your corporate responsibility to your community out of the annual report unless you intend to apply these to all your business dealings. When you can apply your code of conduct, beyond mere regulatory compliance standards, no one will even need to question your commitment to your community and ethical standards. The word on the street may even be quietly spreading that you're OK - another of the relatively invisible army of unsung heroes within the business sector. If all else fails remember: the sustainability of your business depends on it.

Caveat vendor!

:nerd:
NILA
6 years ago,
Registered user
Thanks everyone for your contribution. What can we do in this forum to save people from being swinddled by relax invest and many more of such scams especially as they still have an active website and online adverts?
Regards
NILA
Pharaoh
6 years ago,
Registered user
One step would be to warn anyone you know who is even thinking of placing money with this sort of company. It's easy to be blinded by dollar signs. Just point them to this article. Also, ask them to think about why all the countries in the world with big financial problems never placed a cent into a program like the ones offer by HYIPs.
F0r3x123
6 years ago,
Registered user
Hi,

I always wondered that if this type of schema pay a lot of money to its first clients so they will do the free advertising, what about being one of the first clients, get some money and go away without loses?
Pharaoh
6 years ago,
Registered user
I always wondered that if this type of schema pay a lot of money to its first clients so they will do the free advertising, what about being one of the first clients, get some money and go away witho..

Some pay out at first, others don't. I strongly recommended against trying to jump in and grab money from these in the article. Re-read this part:

Some people play what I call HYIP games. There are HYIP rating sites that tell if HYIPs are paying out to investors or not. Some of these sites are honest, but many are owned by the HYIP companies and are completely fake. Those who play HYIP games look for sites that are fairly new and are currently paying out while trying to lure more people in. They invest modest amounts and try to recover their initial investments as quickly as possible. They leave some money in and try to get as much as they can from the HYIP before it collapses and takes all the remaining money. Sometimes they lose everything, but they can make enough on the profitable ones to have at least a chance of coming out ahead. Personally, I consider this to be unethical. Every dollar placed with a Ponzi scheme makes it possible for that scheme to continue a little longer and steal more money from more people. Those people looking for that “golden moment” to put money in, grab some cash, and get out with a significant profit are only assisting the criminals and taking money from others who still are falling for these scams.
Artofgolf Menu
5 years ago,
Registered user
Dear Pharaoh,

Thank you very much taking your time to write so much information, they are so very useful to avoid traps in the world that we live in.

Could you also make you search on a company eurofx.com . I have few good friends that have already invested into this manage account company that is paying at least 6% per month from their min account of $10,000.

They have show me the investment plans, which you could invest $100,000 with 12% per month payout and still able to get monthly referrer profit sharing up to 20 levels.!! Which were email to me in pdf format, not written somewhere in their website.

Do you need a copy to examine?

I kept telling them it is very fishy, I guess they are so blinded by the promises of dollars falling from the sky.

help much need, thank you very much
Pharaoh
5 years ago,
Registered user
Looks like they bought Eurofx.com in 2012. The website claims they operated previously as Trans World Investment Limited. That's a very generic name, so I searched for "Trans World Investment Limited" forex in Google and only found items where talking about Eurofx or Euro Forex. If they ever were Trans World Investment, that company didn't seem to have any publicly known involvement in forex.

They claim to have over 200 employees worldwide, but Contact Us only has a couple of addresses in London. Both addresses seem to come up with large numbers of hits on Google, so I'm suspicious that either or both probably may be virtual offices.

The new CEO is David Byrne. The news statement claims he worked for Bordellino Capital in Chicago. A Google search for "Bordellino Capital" Chicago only returns links to EuroFx.

Overall, the website is professionally designed, but seems very lacking in solid information about just what the company really does. I don't see any mention of a 20 level deep payout system or even any estimates of returns. I'll have to go on what you reported from the PDF you got.

20 level deep payouts - In general, multi-level-marketing and forex is a very bad mix. People become sales reps for the company and are more concerned with building a downline to increase profits than checking to see if the company is making any real profits.

A $10,000 investment pays 6% per month and a $120,000 investment pays 12% per month (and has that 20 level deep payout). This is a massive red flag. Yes, a larger investment might have a higher rate of return, but double an already suspiciously high rate is a very very bad sign.

Remember, 12% per month compounded would be 1.12^12 would mean that a $1 investment would grow to $3.89 in a year. Sit down with a calculator or spreadsheet and you'll how many years until you own the world.

Demand that they let you directly (via broker platform) view a LIVE account showing a $120,000+ investment making 12% (not even a cent for them or any downline) for 12 consecutive months. Then sit back and laugh at all the excuses about why they can't possibly let you see this.

Ask them for their FSA registration ID. I'm amazed that such a well established firm based on London doesn't have that on their website. :p
Artofgolf Menu
5 years ago,
Registered user
Hi Pharaoh

Thank you so much for your information. Hope i can save my friends from getting any deeper from any ponzi scheme and hopefully i could let our country authority aware of such forex company operating in Singapore.
Scamalert
5 years ago,
Registered user
Another Scam from We Singaporean (Gareth Yong)

> Looks like they bought Eurofx.com in 2012. The website claims they operated previously as Trans World Investment Limited. That's a very generic name, so I searched for "Trans World Investment Limite..

Hi This is another scam from We Singaporean (Gareth Yong)
They had just held A Gala Dinner in Bangkok and I had there too . Hong Kong Singer was invited to perform . At first I though Wow this this it Real . But to the end I saw few important key persons Guess Who ??

Yes , it's our Singapore Scammers . Mo Zi (Alan Mok) Yang Tong (Gareth Yong) and few dogs around . some new faces.
To my surprise they had company listed in Germany ( Creek Project ----- PLC ) . If anyone want to know more about those singapore scammers , leave me a message here I will tell you what scam they are involve .


Take a look at this which is found in their FAQ,

'1.12 Is Euro Forex allowed to provide financial services? Euro Forex financial services is licensed by New Zealand Financial Service Provider, under FSP number: FSP233725. You can go to:
http://www.business.govt.nz/fsp/
or
http://www.fspr.govt.nz
and search for "Euro Forex" to verify this information. '

See what I found in the site .
http://www.business.govt.nz/fsp/app/ui/fsp/version/searchSummaryOtherFSP/FSP233725/4.do


This is another link from UK , giving warning :
http://www.fsa.gov.uk/static/pages/doing/regulated/law/pdf/euro-forex-investment.pdf


Still out there scamming ,
Pharaoh
5 years ago,
Registered user
If you like, go ahead and set up a thread in the Scam Alerts folder for them. Then you can keep it up to date with any new information as you find it.
frosty23
5 years ago,
Registered user
Scam

Dear Sir,

I am very interested to know more about these scammers, I have heard of Euro FX and know they are spending lots of money on offices and parties etc. Do they own Euro FX ? What have they been involved in previously and is there a link to IB Forex ? Euro Forex have recently posted on this on their site too 11th February 2013

Dear Valued Clients,

We have been receiving feedback that "phishing" and/or scam websites that look similar to eurofx.com have appeared recently with the intention of capturing your login ID, password and personal details. Please be informed that eurofxg.com (with an additional “g”) is in no way related to EuroFX. Clients are reminded not to login through or surf this or any other look alike websites as they may contain Trojans or viruses that will compromise your hardware security. While there is nothing much we can do other than to remind our clients, our Legal and IT Department is constantly contemplating any potential action that we may take against the operators of such sites. Meanwhile, clients are strongly advised to always only go to EuroFX .

Another security reminder, clients are strongly advised not to use passwords that are very similar to their name, username, mobile number, e-mail or any other personal details that might be easy for perpetrators to guess. Please also take the security question function seriously and avoid using the same answer for all 3 questions and ensure that all answers are unique and are not similar to your password. A convenient password for you is as convenient for any perpetrator. Clients should also register to use the €urocard as it has been proven to be very effective against such perpetrators.

As a reminder to all our clients, we will never send you an email requesting your password or security answers. If you receive such an e-mail, you are strongly advised not to reply and to disregard it.

Regards,

George Aurelian
Senior Vice President – Client Relationship

Is the pot calling the kettle black ?

Thanks in advance for any responses.
Pharaoh
5 years ago,
Registered user
Sounds very much like the pot calling the kettle black to me. The "phishing" sites could belong to other scammers or could even be their own and be used to give excuses when a client's money disappears - "Oh, I'm sorry - You must have fallen for a phishing site."
DriftTrader
5 years ago,
Registered user
This is a very interesting article, now I know how Ponzi Schemes worked and how you can be easily deluded by this kind of business deal. We need a lot of this kind of article so we could avoid things like Ponzi scheme.
Whitesnake
5 years ago,
Registered user
I have lost some really huge money in the HYIPS and that's when i decided to learn the forex trading myself which helped me a lot today to recover my losses in such ponzi programs.
knowthetruth
5 years ago,
Registered user
Hi,

Would you mind tell mw more about this scammer?

I just found my mom and her friends invested lots of money to the company named Euro Forex.
Pharaoh
5 years ago,
Registered user
I'd need the website to be sure I'm checking the correct company.

There's a broker by that name that has an FSA warning, but it doesn't look like a HYIP.
mingzheng
5 years ago,
Registered user
about euro forex

Their formal site is eurofx.com
I just confirm their information with New Zealand Financial Markets Authority 2 days ago.
And the FMA said their financial services is licensed is un-registered already.
But I think some reason is because FMA of New Zealand had become more strict from last month.
tao2012
5 years ago,
Registered user
> Hi This is another scam from We Singaporean (Gareth Yong)


I am very interesting in EuroFX but highly concern that it could be a scam. So please share me more info about Gareth Yong and her scams.
Thanks!
jim.max
5 years ago,
Registered user
Thanks for sharing it.Very useful for a newbie like me.WIll definitely follow these points.
johndz
4 years ago,
Registered user
Oh, there is a lot of people trying to scam other people all time. I often see that kind of offers, online and offline, its nice to be ready to reject such offers.
Josh Fortin
4 years ago,
Registered user
That's the problem because people are ignorant, they don't bother reading article and warnings.

Also are left with the bull**** the media and marketing is selling to us: easy money, easy life, etc - fast!!

Don't fell for it just invest in your mind, soul and body the results will come.
NicholasM
3 years ago,
Registered user
I think generally if you approach Forex trading with professionalism then you would probably stay away from ponzi schemes. as a professional you understand that in Forex you can either win or lose, and that there is no easy way out. Therefore, whenever you come across such advertisements you are well informed and are able to see their intended end. As such, you can easily ignore their means.
svsingh
2 years ago,
Registered user

Ponzi Schemes and HYIPS
Free Money Traps
By Pharaoh



Thanks for the advise
Forex Detective
a year ago,
Registered user
I need to include in the HYIPS and Ponzi Scheme session the following companies: FX10 Investments, Forex50 Investments and Elite Earners Club, all of them with similar investment in Forex, where investors send their money through e-wallets and bitcoins, direct into the trader account, which supposedly trades on the Forex and give returns from 10 to 16% every single week, and the promises are for a life. For further information, please read the respective threads that I created and I'm currently investigating.
Rizog
8 months ago,
Registered user
It is so unfortunate that people keep falling prey to same old tricks played over and over again. One of the problems is that people have a very short term outlook. So, an impressive return for just six months is enough to fool them into investing more or advertising the scheme to other folks. Is it possible to get these schemes rates just like Corporate bonds or various other financial instruments??
Lee Louey
6 months ago,
Registered user
I certainly agree to you bro... I was once a victim of PONZI SCHEMES and HYIPS. I was totally lured by their high amount of return of investments that usually in a short period of time. It was my greediness though.. and It's a very big lesson learned for me.. thanks for sharing these thoughts.