Ponzi Scheme?

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SansaStark
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Ponzi Scheme?

Post by SansaStark »

I'm in need of a bit of advice regarding not my own personal investments but that of a parent. I've recently taken a personal interest in investing a portion of a monetary gift that I have been sitting on for several years into a Roth IRA as a means of starting my portfolio. I am in the training portion of my career, so I have been advised by multiple financial literate individuals that my best option is to maximize after-tax retirement savings accounts. To make a long story short I wanted to run this by a parent of mine to get their take on how they have been investing money and what their take was on this investment strategy.

Said parent told me that they have currently placed a large some of money (approximately $300k) with an investor who deals in currency trading. Said investor is a friend of a family friend who previously used to work in banking (position or credentials I could not deduce) and who retired early from this position and pursued currency trading for approximately the last 20 years. He offers clientele 10% annual returns on their investment which the client could choose to receive in the form of a 1099 either semi-annually or annually. The client could also choose to not receive the return but rather add it to the principal amount and compound the return year after year. Also reportedly he offers 12% if the client invests over $1 million.

Given the high returns and the clientele basis (he works only with the people within our church community), this was setting off red flags for me. But I decided to keep asking information to get to the bottom of this. Per my parent, this investor has a team of approximately 100 "traders" working in a country overseas (same country which most of this church community immigrated from) who do not earn an income but rather earn a percentage of the earning they make off their trades. In order to protect his clients principal, he has $40 million dollars spread across several "big name" international banks. He is currently trading with approximately $60 million. He does not disclose what his actual earnings on this trading are, but does guarantee the 10% to his clients even if he makes 20% or more in returns. If a client wants to retrieve their principal and their earnings, they can do so at any time given they provide a 45 day notice. There is no reported penalty for retrieving your money or limit on how much you can retrieve.

This is one of those situations that I feel are "this is too good to be true", and even though I have very limited financial knowledge, something seems to be off. I worry about my parent as well who probably has close to half of their nest egg invested with this person and probably several family friends who have maybe even more money invested with this guy.

I would like to know what this community's thoughts are on this, whether it is likely a scheme or could this actually be legitimate. I intend to find out how to contact this investor to ask him more questions. What questions should I ask that may shed some light on this operation?

Stay Safe!
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Re: Ponzi Scheme?

Post by Sandtrap »

Does not pass the "smell test".

Are there legal/gov't agencies where this helpful fellow can be checked ??

Do so.

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FiveK
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Re: Ponzi Scheme?

Post by FiveK »

SansaStark wrote: Sat Apr 11, 2020 3:20 pmIf a client wants to retrieve their principal and their earnings, they can do so at any time given they provide a 45 day notice. There is no reported penalty for retrieving your money or limit on how much you can retrieve.
...
I would like to know what this community's thoughts are on this, whether it is likely a scheme or could this actually be legitimate. I intend to find out how to contact this investor to ask him more questions. What questions should I ask that may shed some light on this operation?
Likely not legitimate, for all the reasons you mention.

One good question, if your parent will ask it: please remit my current account balance ASAP.
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HomerJ
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Re: Ponzi Scheme?

Post by HomerJ »

99.9% chance this a Ponzi scheme.

There are no "guaranteed"10%-12% financial instruments.

Edit: 100% chance
Last edited by HomerJ on Sat Apr 11, 2020 3:38 pm, edited 1 time in total.
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Re: Ponzi Scheme?

Post by Raybo »

No one can consistently produce 10% returns, period. I've invested in managed currency accounts (where I lost money) and I don't see why someone would be able to time this market any more than someone can time the stock market. But, currency trading sounds exotic enough that it might fool people into thinking this is something esoteric and, therefore, something they should be in on.

Think about this: there are 100 people trading currencies for this guy. Really? So, it isn't one really smart guy managing to get 10% returns each year, it is 100? Even if one guy can beat the market, there is no way 100 are?

This is such a classic scam that I can't see it being anything else.
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Re: Ponzi Scheme?

Post by ResearchMed »

FiveK wrote: Sat Apr 11, 2020 3:30 pm
SansaStark wrote: Sat Apr 11, 2020 3:20 pmIf a client wants to retrieve their principal and their earnings, they can do so at any time given they provide a 45 day notice. There is no reported penalty for retrieving your money or limit on how much you can retrieve.
...
I would like to know what this community's thoughts are on this, whether it is likely a scheme or could this actually be legitimate. I intend to find out how to contact this investor to ask him more questions. What questions should I ask that may shed some light on this operation?
Likely not legitimate, for all the reasons you mention.

One good question, if your parent will ask it: please remit my current account balance ASAP.
DEFINITELY questionable!

(And welcome to Bogleheads! :happy )

A second question for your parent to ask is about getting the money out.
If there are all sorts of hoops to jump through, or long advance notice... that might also suggest that the money isn't really "there".

How would your parents feel about your discussing this possibility with them?

Another/better(?) possibility is to submit a tip (and an anonymous one if you prefer) to either SEC or FBI.
(Can anyone here specify which is the appropriate agency for this?)

RM
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mega317
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Re: Ponzi Scheme?

Post by mega317 »

Weird so did this dude join your church and become a member of your community so he could then rip people off? I wonder how many churches he goes to
https://www.bogleheads.org/forum/viewtopic.php?t=6212
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Re: Ponzi Scheme?

Post by retired@50 »

Don't forget your 10 foot pole before going near this one...

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Re: Ponzi Scheme?

Post by SansaStark »

Raybo wrote: Sat Apr 11, 2020 3:34 pm No one can consistently produce 10% returns, period. I've invested in managed currency accounts (where I lost money) and I don't see why someone would be able to time this market any more than someone can time the stock market. But, currency trading sounds exotic enough that it might fool people into thinking this is something esoteric and, therefore, something they should be in on.

Think about this: there are 100 people trading currencies for this guy. Really? So, it isn't one really smart guy managing to get 10% returns each year, it is 100? Even if one guy can beat the market, there is no way 100 are?

This is such a classic scam that I can't see it being anything else.
I completely agree with all that's been already said, but given my current position (I am the young daughter who hasn't dealt with an "real sum" of money) what can I use to leverage the conversation with this parent who is stubborn and has always controlled all finances of the household? Especially since he has had this investment with this guy for 5+ years and has already received $55,000?
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Re: Ponzi Scheme?

Post by SansaStark »

mega317 wrote: Sat Apr 11, 2020 3:38 pm Weird so did this dude join your church and become a member of your community so he could then rip people off? I wonder how many churches he goes to
When I refer to "church" I mean a certain denomination from one particular country that has pretty tight-knit communities all over the world and so we identify with each other. I don't want to give too many details in case someone on here may be from said group. And he is not new, he has been long time friends with family friends of ours. That's probably what feeds into the trust aspect of it.
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Re: Ponzi Scheme?

Post by ResearchMed »

SansaStark wrote: Sat Apr 11, 2020 3:42 pm
mega317 wrote: Sat Apr 11, 2020 3:38 pm Weird so did this dude join your church and become a member of your community so he could then rip people off? I wonder how many churches he goes to
When I refer to "church" I mean a certain denomination from one particular country that has pretty tight-knit communities all over the world and so we identify with each other. I don't want to give too many details in case someone on here may be from said group. And he is not new, he has been long time friends with family friends of ours. That's probably what feeds into the trust aspect of it.
And this "small, *special*, group aspect" is also characteristic. Both in terms of apparent "trust" and also a sense of exclusivity.

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Re: Ponzi Scheme?

Post by FiveK »

SansaStark wrote: Sat Apr 11, 2020 3:40 pm Especially since he has had this investment with this guy for 5+ years and has already received $55,000?
$11K/yr/$300K = 3.67%/yr, not 10%. And that's if "received" means "put into your parent's bank account."

If "received" means "shown on a paper statement," refer your parent to Madoff investment scandal.
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Re: Ponzi Scheme?

Post by TravelGeek »

SansaStark wrote: Sat Apr 11, 2020 3:40 pm
I completely agree with all that's been already said, but given my current position (I am the young daughter who hasn't dealt with an "real sum" of money) what can I use to leverage the conversation with this parent who is stubborn and has always controlled all finances of the household? Especially since he has had this investment with this guy for 5+ years and has already received $55,000?
Perhaps there is a documentary about the Madoff scam that you could watch with your parent?

E.g., https://www.pbs.org/video/frontline-the-madoff-affair/
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Re: Ponzi Scheme?

Post by dukeblue219 »

Always the possibility that there's organized crime involved too given the nature (currency) and international origin. Don't get involved in something where the assets, even if real, could get frozen for a decade due to criminal investigation.

Don't touch this with a ten foot pole.
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Re: Ponzi Scheme?

Post by Rosencrantz1 »

HomerJ wrote: Sat Apr 11, 2020 3:32 pm 99.9% chance this a Ponzi scheme.

There are no "guaranteed"10%-12% financial instruments.

Edit: 100% chance
+1 I would add the word "Period." at the end of this statement.

OP: I think you're absolutely correct in questioning this "investment".

Best of luck to you.
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Re: Ponzi Scheme?

Post by Archimedes »

I would advise your parent that there are multiple parallels of their current investment to the Madoff scandal of the last decade. See what the response is. You warn said parent, but then your job is to back off, to let it go. It is your parents’ money to lose. It is your responsibility to share your observations and concern with love.
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Re: Ponzi Scheme?

Post by SansaStark »

FiveK wrote: Sat Apr 11, 2020 3:47 pm
SansaStark wrote: Sat Apr 11, 2020 3:40 pm Especially since he has had this investment with this guy for 5+ years and has already received $55,000?
$11K/yr/$300K = 3.67%/yr, not 10%. And that's if "received" means "put into your parent's bank account."

If "received" means "shown on a paper statement," refer your parent to Madoff investment scandal.
I think my parent started with $100,000 and may have increased to $300,000 recently. But good point about the "received" part. I have mentioned how this sounds like the Madoff scandal as well.
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Re: Ponzi Scheme?

Post by Broken Man 1999 »

I can't see the 10% returns being solid.

Especially given the various moves of the world's central banks. Seems to be risky to me.

All you can do is to try to see exactly what is going on, if your parents are willing to share info with you.

You might be able to check the guy out via the regulatory route.

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Re: Ponzi Scheme?

Post by rxtra8 »

I saw the same thing involving an ex-girlfriend and her parents; both got ripped off for over $100,000 each. As soon as I hear "church acquaintance" bells go off...same as when I heard this from my ex and the OPs statement. This is a sure scam with religious group members being easy prey for another religious group members financial pitch; your guard is down.

Advise them to ask for their funds in full and then run! My ex and her parents were too late when I told her to remove all investments ASAP...then the financial guys gave her some excuses as to the money being tied up/invested...and then delay, delay, delay and finally the rude awakening....all funds are gone.

Good luck
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Re: Ponzi Scheme?

Post by rob »

IMO Zero chance this is legit.... Assume there is no money left.

IMO Smart thing is to make up a viable excuse to get most but not all of the funds out (help you with a house deposit... anything).... Then go back for the smaller remain amt. Wanting the whole thing out is a red flag to the con.
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Re: Ponzi Scheme?

Post by cheese_breath »

SansaStark wrote: Sat Apr 11, 2020 3:59 pm
FiveK wrote: Sat Apr 11, 2020 3:47 pm
SansaStark wrote: Sat Apr 11, 2020 3:40 pm Especially since he has had this investment with this guy for 5+ years and has already received $55,000?
$11K/yr/$300K = 3.67%/yr, not 10%. And that's if "received" means "put into your parent's bank account."

If "received" means "shown on a paper statement," refer your parent to Madoff investment scandal.
I think my parent started with $100,000 and may have increased to $300,000 recently. But good point about the "received" part. I have mentioned how this sounds like the Madoff scandal as well.
Even if "received" means cash in hand, that might not be so good. If this is ponzi (and it certainly seems crooked) the government could claw it back if he's found out.
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Re: Ponzi Scheme?

Post by MathIsMyWayr »

SansaStark wrote: Sat Apr 11, 2020 3:42 pm . ..a certain denomination from one particular country that has pretty tight-knit communities all over the world and so we identify with each other...
This is how it begins ... Am I reading a story by Sherlock Holmes?
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Re: Ponzi Scheme?

Post by Sandtrap »

SansaStark wrote: Sat Apr 11, 2020 3:40 pm
Raybo wrote: Sat Apr 11, 2020 3:34 pm No one can consistently produce 10% returns, period. I've invested in managed currency accounts (where I lost money) and I don't see why someone would be able to time this market any more than someone can time the stock market. But, currency trading sounds exotic enough that it might fool people into thinking this is something esoteric and, therefore, something they should be in on.

Think about this: there are 100 people trading currencies for this guy. Really? So, it isn't one really smart guy managing to get 10% returns each year, it is 100? Even if one guy can beat the market, there is no way 100 are?

This is such a classic scam that I can't see it being anything else.
I completely agree with all that's been already said, but given my current position (I am the young daughter who hasn't dealt with an "real sum" of money) what can I use to leverage the conversation with this parent who is stubborn and has always controlled all finances of the household? Especially since he has had this investment with this guy for 5+ years and has already received $55,000?
Unanimous tip to the FBI.
Write out everything you've said so far. Print it out on a computer printer. Mail it to the local FBI office.
Be sure to include the church name and description of the "unsub". You dont' have to include the name of your family member.

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ResearchMed
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Re: Ponzi Scheme?

Post by ResearchMed »

cheese_breath wrote: Sat Apr 11, 2020 4:12 pm
SansaStark wrote: Sat Apr 11, 2020 3:59 pm
FiveK wrote: Sat Apr 11, 2020 3:47 pm
SansaStark wrote: Sat Apr 11, 2020 3:40 pm Especially since he has had this investment with this guy for 5+ years and has already received $55,000?
$11K/yr/$300K = 3.67%/yr, not 10%. And that's if "received" means "put into your parent's bank account."

If "received" means "shown on a paper statement," refer your parent to Madoff investment scandal.
I think my parent started with $100,000 and may have increased to $300,000 recently. But good point about the "received" part. I have mentioned how this sounds like the Madoff scandal as well.
Even if "received" means cash in hand, that might not be so good. If this is ponzi (and it certainly seems crooked) the government could claw it back if he's found out.
This is one of the reasons to try to put a stop to this.

IF OP cannot get parents to "stop" (e.g., they get defensive and insist their "friend" is on the up and up), then at *least* try to arrange something so they don't keep pouring more money into it. That would be more money they may not get back, and meanwhile, they also are not investing in something that does have the chance of yielding some positive returns in the future.

Reporting this person, along with a short description (such as OP has given above, but *with* the identifying details) to one of the agencies such as SEC or FBI... and anonymously if OP prefers.
You'd almost definitely be doing a real favor to all of the others who "trusted", along with your parents.

Good luck.

RM
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Re: Ponzi Scheme?

Post by Sandtrap »

SansaStark wrote: Sat Apr 11, 2020 3:59 pm
FiveK wrote: Sat Apr 11, 2020 3:47 pm
SansaStark wrote: Sat Apr 11, 2020 3:40 pm Especially since he has had this investment with this guy for 5+ years and has already received $55,000?
$11K/yr/$300K = 3.67%/yr, not 10%. And that's if "received" means "put into your parent's bank account."

If "received" means "shown on a paper statement," refer your parent to Madoff investment scandal.
I think my parent started with $100,000 and may have increased to $300,000 recently. But good point about the "received" part. I have mentioned how this sounds like the Madoff scandal as well.
The odds are low that they will retrieve their money, even if the "unsub" is caught.
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Re: Ponzi Scheme?

Post by dmcmahon »

Run. Fast.
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Re: Ponzi Scheme?

Post by Sandtrap »

Sandtrap wrote: Sat Apr 11, 2020 4:19 pm
SansaStark wrote: Sat Apr 11, 2020 3:59 pm
FiveK wrote: Sat Apr 11, 2020 3:47 pm
SansaStark wrote: Sat Apr 11, 2020 3:40 pm Especially since he has had this investment with this guy for 5+ years and has already received $55,000?
$11K/yr/$300K = 3.67%/yr, not 10%. And that's if "received" means "put into your parent's bank account."

If "received" means "shown on a paper statement," refer your parent to Madoff investment scandal.
I think my parent started with $100,000 and may have increased to $300,000 recently. But good point about the "received" part. I have mentioned how this sounds like the Madoff scandal as well.
The odds are low that they will retrieve their money, even if the "unsub" is caught.

What is the name and address of the church?

j :happy
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Re: Ponzi Scheme?

Post by suemarkp »

Think how easy this is to do. You take 100K from someone to "invest". You give them 10% for a few years which is just returning a portion of their capital while the scammer tries to milk more out of them or others. At some point, the scammer sees he can't get any more money so he disappears with what is left. And that is with investing nothing. He could stick all of those investable assets it in the bank and just pocket the interest too until he runs off and hides.

Even stringing the original people out for 5 years leaves the scammer with about 50% of what he originally took.
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Re: Ponzi Scheme?

Post by cheese_breath »

Sandtrap wrote: Sat Apr 11, 2020 4:18 pm
SansaStark wrote: Sat Apr 11, 2020 3:40 pm
Raybo wrote: Sat Apr 11, 2020 3:34 pm No one can consistently produce 10% returns, period. I've invested in managed currency accounts (where I lost money) and I don't see why someone would be able to time this market any more than someone can time the stock market. But, currency trading sounds exotic enough that it might fool people into thinking this is something esoteric and, therefore, something they should be in on.

Think about this: there are 100 people trading currencies for this guy. Really? So, it isn't one really smart guy managing to get 10% returns each year, it is 100? Even if one guy can beat the market, there is no way 100 are?

This is such a classic scam that I can't see it being anything else.
I completely agree with all that's been already said, but given my current position (I am the young daughter who hasn't dealt with an "real sum" of money) what can I use to leverage the conversation with this parent who is stubborn and has always controlled all finances of the household? Especially since he has had this investment with this guy for 5+ years and has already received $55,000?
Unanimous tip to the FBI.
Write out everything you've said so far. Print it out on a computer printer. Mail it to the local FBI office.
Be sure to include the church name and description of the "unsub". You dont' have to include the name of your family member.

j :happy
Don't you mean anonymous? :P
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Re: Ponzi Scheme?

Post by Sandtrap »

cheese_breath wrote: Sat Apr 11, 2020 4:22 pm
Sandtrap wrote: Sat Apr 11, 2020 4:18 pm
SansaStark wrote: Sat Apr 11, 2020 3:40 pm
Raybo wrote: Sat Apr 11, 2020 3:34 pm No one can consistently produce 10% returns, period. I've invested in managed currency accounts (where I lost money) and I don't see why someone would be able to time this market any more than someone can time the stock market. But, currency trading sounds exotic enough that it might fool people into thinking this is something esoteric and, therefore, something they should be in on.

Think about this: there are 100 people trading currencies for this guy. Really? So, it isn't one really smart guy managing to get 10% returns each year, it is 100? Even if one guy can beat the market, there is no way 100 are?

This is such a classic scam that I can't see it being anything else.
I completely agree with all that's been already said, but given my current position (I am the young daughter who hasn't dealt with an "real sum" of money) what can I use to leverage the conversation with this parent who is stubborn and has always controlled all finances of the household? Especially since he has had this investment with this guy for 5+ years and has already received $55,000?
Unanimous tip to the FBI.
Write out everything you've said so far. Print it out on a computer printer. Mail it to the local FBI office.
Be sure to include the church name and description of the "unsub". You dont' have to include the name of your family member.

j :happy
Don't you mean anonymous? :P
incognitto

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Re: Ponzi Scheme?

Post by Stinky »

Welcome to the Forum!

SansaStark, you are wise beyond your years. You have correctly analyzed the situation. Your parents are being scammed, no doubt.

Now the challenge is convincing your parents that they are being scammed. The Madoff references above are a great place to start. Madoff promised over-market returns and was supposedly “selective” about whom he dealt with. There was a faith component to it too.

If nothing else, try to make sure your parents don’t invest any more with this crook. And suggest that they get all the cash out that they can, as soon as possible.

There’s a good chance that your parents won’t listen to you. But please, please, try.

Please post back on the Forum as this situation develops.
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Re: Ponzi Scheme?

Post by oldcomputerguy »

SansaStark wrote: Sat Apr 11, 2020 3:20 pm Said parent told me that they have currently placed a large some of money (approximately $300k) with an investor who deals in currency trading.
SansaStark wrote: Sat Apr 11, 2020 3:40 pm I completely agree with all that's been already said, but given my current position (I am the young daughter who hasn't dealt with an "real sum" of money) what can I use to leverage the conversation with this parent who is stubborn and has always controlled all finances of the household? Especially since he has had this investment with this guy for 5+ years and has already received $55,000?
Wait... Did they have the entire $300,000+ invested with the guy for 5+ years? A 10% return on $300,000 is $30,000; if the investment paid that annually for five years, that would be close to $150,000, not $55,000. Something doesn't add up.
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Re: Ponzi Scheme?

Post by MotoTrojan »

Glad to see I wasn't the 1st person to type FBI or SEC as that should be in your future if you have any amount of moral compass. On a less morally sound basis I would probably suggest my parents start requesting some funds and tell the individual they need to liquidate most of their holdings to build a dream home or something less suspicious... A bit of insider-trading if you will because this guy needs to be brought down and many people won't ever see those assets again.

I figure it'll be hard to convince this parent so I would tell them - "I am going to the FBI whether you approve or not. If this is legit, then there is nothing to worry about and you and the others will be fine. If not, then maybe you are safer pulling it now.".
Last edited by MotoTrojan on Sat Apr 11, 2020 4:30 pm, edited 1 time in total.
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Re: Ponzi Scheme?

Post by cheese_breath »

oldcomputerguy wrote: Sat Apr 11, 2020 4:27 pm
SansaStark wrote: Sat Apr 11, 2020 3:20 pm Said parent told me that they have currently placed a large some of money (approximately $300k) with an investor who deals in currency trading.
SansaStark wrote: Sat Apr 11, 2020 3:40 pm I completely agree with all that's been already said, but given my current position (I am the young daughter who hasn't dealt with an "real sum" of money) what can I use to leverage the conversation with this parent who is stubborn and has always controlled all finances of the household? Especially since he has had this investment with this guy for 5+ years and has already received $55,000?
Wait... Did they have the entire $300,000+ invested with the guy for 5+ years? A 10% return on $300,000 is $30,000; if the investment paid that annually for five years, that would be close to $150,000, not $55,000. Something doesn't add up.
No. OP said they started with $100K and recently upped it to $300K.
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MarkBarb
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Re: Ponzi Scheme?

Post by MarkBarb »

Wow! Tough situation. My son watches a lot of American Greed and this sounds like so many of those cases - trusted community like a church, guaranteed returns, a "friend" of the family.

If you can do it, you may have to "play" your parents to get more info. Act interested. Ask to see their statements so you can understand it better. Do whatever research you can quickly and easily and then go to the FBI. The sooner you act, the less money the crook will take from the community.

One acid test for these things is how the money is held. With every legitimate trader I've dealt with, your assets are held at a third party. You should be able to independently go to that company holding the money to verify that it is really there. With crooks, they hold your money. The statements you see are completely fraudulent. When you look at your parent's statements, look to see who it is held with.

Another thing to look at is how the money was reported on a 1099. That document should have a Tax ID of the company holding the money. That might be an avenue for research.

Go to the FBI. They can probably give you much better advice than anyone here. Do it soon.
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HomerJ
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Re: Ponzi Scheme?

Post by HomerJ »

suemarkp wrote: Sat Apr 11, 2020 4:20 pm Think how easy this is to do. You take 100K from someone to "invest". You give them 10% for a few years which is just returning a portion of their capital while the scammer tries to milk more out of them or others. At some point, the scammer sees he can't get any more money so he disappears with what is left. And that is with investing nothing. He could stick all of those investable assets it in the bank and just pocket the interest too until he runs off and hides.

Even stringing the original people out for 5 years leaves the scammer with about 50% of what he originally took.
And usually, and in this case specifically, after giving them back 50% of their own money, they really start trusting you and send you ANOTHER $200,000.
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ResearchMed
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Re: Ponzi Scheme?

Post by ResearchMed »

MotoTrojan wrote: Sat Apr 11, 2020 4:28 pm Glad to see I wasn't the 1st person to type FBI or SEC as that should be in your future if you have any amount of moral compass. On a less morally sound basis I would probably suggest my parents start requesting some funds and tell the individual they need to liquidate most of their holdings to build a dream home or something less suspicious... A bit of insider-trading if you will because this guy needs to be brought down and many people won't ever see those assets again.

I figure it'll be hard to convince this parent so I would tell them - "I am going to the FBI whether you approve or not. If this is legit, then there is nothing to worry about and you and the others will be fine. If not, then maybe you are safer pulling it now.".
I'd be very cautious about mentioning "FBI"/etc., to parents if they remain convinced this guy is "a good deal!".
You'd be likely to alienate not only your parents, but many of the others in the group if your parents mention this.

Make the report privately.
(Also, the "otherwise" could sound like a threat to your parents, and the last thing they need is more stress about this... even if the REAL stress is later... You'd probably like to keep your relationship with your parents the best it is possible now.)

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Re: Ponzi Scheme?

Post by NMBob »

"Wow! Tough situation. My son watches a lot of American Greed and this sounds like so many of those cases - trusted community like a church, guaranteed returns, a "friend" of the family."

You beat me to it. I was going to say the OP's post is one of the least original posts every, because it sounds exactly like half the scripts on American Greed. OP, Definitely figure the best way to investigate it and do it. Best wishes.
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BL
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Re: Ponzi Scheme?

Post by BL »

rob wrote: Sat Apr 11, 2020 4:12 pm IMO Zero chance this is legit.... Assume there is no money left.

IMO Smart thing is to make up a viable excuse to get most but not all of the funds out (help you with a house deposit... anything).... Then go back for the smaller remain amt. Wanting the whole thing out is a red flag to the con.
+1
This might be a possible way to get something back, assuming your parents are agreeable, of course. Unlikely it will happen unless it fits in with schemer's plans.

Agree that there are all sorts of red flags here. Sounds like a sunk cost, unfortunately.
There is only so much you can do with your family. FTC (federal trade commission) is another possible place to report.
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Arthur Digby Sellers
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Re: Ponzi Scheme?

Post by Arthur Digby Sellers »

The federal agency that investigates foreign currency exchange commodity pool trading (which is what you describe) is the Commodity Futures Trading Commission (“CFTC”). Fraud is common in these types of investments, and the CFTC frequently brings enforcement action. Here is a link to a recent enforcement action: https://www.cftc.gov/PressRoom/PressReleases/8119-20

The individual your parents have invested money with may be required to register as a commodity pool operator. You can look to see if he is registered at this website: https://www.nfa.futures.org/basicnet/

If you wish to report what you know to the CFTC, directions to do so are available at this link: https://www.cftc.gov/complaint
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Re: Ponzi Scheme?

Post by Nicolas »

suemarkp wrote: Sat Apr 11, 2020 4:20 pm He could stick all of those investable assets it in the bank and just pocket the interest too until he runs off and hides.
The scammers usually blow all the money pretty quickly on ridiculous luxuries and extravagances such as mansions, supercars, drugs, women, gambling, etc., they don’t keep it in the bank long. Maybe they keep enough to pay income to the early investors, the rest they just blow.
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Re: Ponzi Scheme?

Post by alex_686 »

+1 to Arthur Digby Sellers

This sounds like affinity fraud.
https://en.wikipedia.org/wiki/Affinity_fraud

They are common in Ponzi Schemes. Madoff was one - targeting Jewish families.

This should be pretty easy to figure out. IIRC, by regulation statements must be sent out quarterly listing assets and trades for the period and trades. It should list the firm, location, primary broker, licencing (i.e., FINRA), etc.

Or maybe it is a limited partnership. In which case there should be annual reporting and the like.

Get either of these 2 and you should be able to make a fair amount of headway on figuring out if this thing is legit or not.

The thing that is setting off my alarms bells is the "guarantee" bit. When I was working in compliance this was a huge red flag.
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Arthur Digby Sellers
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Re: Ponzi Scheme?

Post by Arthur Digby Sellers »

Arthur Digby Sellers wrote: Sat Apr 11, 2020 4:43 pm The federal agency that investigates foreign currency exchange commodity pool trading (which is what you describe) is the Commodity Futures Trading Commission (“CFTC”). Fraud is common in these types of investments, and the CFTC frequently brings enforcement action. Here is a link to a recent enforcement action: https://www.cftc.gov/PressRoom/PressReleases/8119-20

The individual your parents have invested money with may be required to register as a commodity pool operator. You can look to see if he is registered at this website: https://www.nfa.futures.org/basicnet/

If you wish to report what you know to the CFTC, directions to do so are available at this link: https://www.cftc.gov/complaint
I should have added that can also contact the FBI or the securities division of your state’s government. You may want to report the issue to all three entities in the hopes that at least one will run with it quickly.

Finally, the CFTC has issued a commodity pool fraud advisory that may have helpful information for you or your parents. It is available here: https://www.cftc.gov/LearnAndProtect/Fr ... ypool.html
Arthur Digby Sellers
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Re: Ponzi Scheme?

Post by Arthur Digby Sellers »

Arthur Digby Sellers wrote: Sat Apr 11, 2020 4:52 pm
Arthur Digby Sellers wrote: Sat Apr 11, 2020 4:43 pm The federal agency that investigates foreign currency exchange commodity pool trading (which is what you describe) is the Commodity Futures Trading Commission (“CFTC”). Fraud is common in these types of investments, and the CFTC frequently brings enforcement action. Here is a link to a recent enforcement action: https://www.cftc.gov/PressRoom/PressReleases/8119-20

The individual your parents have invested money with may be required to register as a commodity pool operator. You can look to see if he is registered at this website: https://www.nfa.futures.org/basicnet/

If you wish to report what you know to the CFTC, directions to do so are available at this link: https://www.cftc.gov/complaint
I should have added that you can also contact the FBI or the securities division of your state’s government. You may want to report the issue to all three entities in the hopes that at least one will run with it quickly.

Finally, the CFTC has issued a commodity pool fraud advisory that may have helpful information for you or your parents. It is available here: https://www.cftc.gov/LearnAndProtect/Fr ... ypool.html
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Re: Ponzi Scheme?

Post by Nicolas »

The author Jackie Mitchard lost her fortune to a scammer who promised double-digit profits through currency trading. https://www.dailymail.co.uk/news/articl ... rtune.html https://youtu.be/sbTXCpJaEGU

His name is Trevor Cook. He’s sitting in jail now, but here was his pitch: https://youtu.be/9zOMuxsaNcc
Last edited by Nicolas on Sat Apr 11, 2020 9:43 pm, edited 3 times in total.
ballons
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Re: Ponzi Scheme?

Post by ballons »

  1. placed a large some of money (approximately $300k) with an investor
  2. who deals in currency trading.
  3. Said investor is a friend of a family friend
  4. who retired early from this position
  5. He offers clientele 10% annual returns
  6. he offers 12% if the client invests over $1 million.
  7. (he works only with the people within our church community)
  8. this investor has a team of approximately 100 "traders" working in a country overseas
  9. he has $40 million dollars spread across several "big name" international banks.
  10. guarantee the 10% to his clients
10 giant RED FLAGS. #7 is huge. My guess is the church also gave him money as well.

You shouldn't be asking questions but demanding the $300K investment back.
adam1712
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Re: Ponzi Scheme?

Post by adam1712 »

I agree with an anonymous report to legal authorities.

Another approach with your parents is to at least remind them of the importance of diversification. You can remind them even if it's not a scam, it's impossible for this to not have some risk. Hopefully that can convince them to not be greedy and invest any more of their money.
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SansaStark
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Re: Ponzi Scheme?

Post by SansaStark »

Arthur Digby Sellers wrote: Sat Apr 11, 2020 4:43 pm The federal agency that investigates foreign currency exchange commodity pool trading (which is what you describe) is the Commodity Futures Trading Commission (“CFTC”). Fraud is common in these types of investments, and the CFTC frequently brings enforcement action. Here is a link to a recent enforcement action: https://www.cftc.gov/PressRoom/PressReleases/8119-20

The individual your parents have invested money with may be required to register as a commodity pool operator. You can look to see if he is registered at this website: https://www.nfa.futures.org/basicnet/

If you wish to report what you know to the CFTC, directions to do so are available at this link: https://www.cftc.gov/complaint
I’ve looked this guy up and found that he is not an NFA member (but he does have an NFA ID #?). And what does this information mean ?

History Details

Date Description
***The name of the company has been removed ***
07/16/2007 PRINCIPAL PENDING STATUS WITHDRAWN
04/17/2007 PRINCIPAL PENDING
Last edited by SansaStark on Sat Apr 11, 2020 6:30 pm, edited 1 time in total.
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Watty
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Re: Ponzi Scheme?

Post by Watty »

HomerJ wrote: Sat Apr 11, 2020 3:32 pm 99.9% chance this a Ponzi scheme.

There are no "guaranteed"10%-12% financial instruments.

Edit: 100% chance
+1

One huge red flag is that if they could somehow actually do this then they would not need investors money to make a fortune.

They could be billionaires by investing their own money or even borrowing money at a lower interest rate.

They should try to get their money back ASAP since there is a small chance they could get it out before the scam collapses.
Arthur Digby Sellers
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Re: Ponzi Scheme?

Post by Arthur Digby Sellers »

SansaStark wrote: Sat Apr 11, 2020 5:15 pm
Arthur Digby Sellers wrote: Sat Apr 11, 2020 4:43 pm The federal agency that investigates foreign currency exchange commodity pool trading (which is what you describe) is the Commodity Futures Trading Commission (“CFTC”). Fraud is common in these types of investments, and the CFTC frequently brings enforcement action. Here is a link to a recent enforcement action: https://www.cftc.gov/PressRoom/PressReleases/8119-20

The individual your parents have invested money with may be required to register as a commodity pool operator. You can look to see if he is registered at this website: https://www.nfa.futures.org/basicnet/

If you wish to report what you know to the CFTC, directions to do so are available at this link: https://www.cftc.gov/complaint
I’ve looked this guy up and found that he is not an NFA member (but he does have an NFA ID #?). And what does this information mean ?

History Details

Date Description
[REDACTED]
07/16/2007 PRINCIPAL PENDING STATUS WITHDRAWN
04/17/2007 PRINCIPAL PENDING
I can’t give you specific advice about your particular case, but it might be helpful to include the information you found if/when you report the issue to the authorities.
Last edited by Arthur Digby Sellers on Thu Apr 30, 2020 3:09 pm, edited 1 time in total.
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