Charles Ponzi stole millions from investors in the 1920s by promising unusually high returns. Since then, his name has been used to describe schemes in which early investors may receive payouts, but that money comes from later investors rather than real profits. These schemes collapse when new money stops coming in.
Unfortunately, people still fall for Ponzi schemes. In November, a Florida man pleaded guilty to defrauding investors out of more than $27 million through a company that claimed to offer ownership interests in profitable businesses. Prosecutors said he used fake financial documents to make the companies appear successful, when in reality his company had no ownership interest or control over the businesses he marketed, including to investors in West Tennessee.
The red flags of a Ponzi scheme can include promises of high returns with little or no risk, investments that seem to generate steady returns regardless of market conditions, unregistered investments, unlicensed sellers, and secretive or overly complex strategies.
To learn more about scams, check out a company, file a complaint, or leave a customer review, visit: bbb.org or call (800) 222-8754