What types of investment fraud exist?
Some common types of investment schemes are: • Ponzi schemes are a type of illegal pyramid scheme named for Charles Ponzi, who duped thousands of New England residents into investing in a postage stamp speculation scheme back in the 1920s. The scheme works on the principle of using money from new investors to pay off earlier investors. • Pyramid scams use product sales to attract investors, but rely on using money coming in from new recruits to pay off early stage investors. People interested in buying the products are convinced to join for price benefits. • International fraud artists use an investment scheme called Prime Bank Notes that offer extremely high yields in a relatively short period. They claim to have access to “bank guarantees” which they can buy at a discount and sell at a premium. The purpose is to encourage the victim to send money to a foreign bank where it is eventually transferred to an offshore account that is in the control of the con artist. • Affinity frauds und
