5 Signs Your Surefire Hedge Fund Investment Is A Ponzi Scheme

Jan 2 2015 | 6:25am ET

So, without further ado, here are some signs your surefire investment may be a Ponzi scheme:

1. It sounds too good to be true.

Ponzi's original scheme started out as an arbitrage deal based on the price difference between Italian and American postage stamps. When the actual arbitrage deal bogged down in bureaucracy, he continued taking in investor money—promising 100% returns in 90 days.

Sarah Howe, a 53-year-old widow from Boston, created the Ladies Deposit in 1879—a Ponzi scheme that predated Ponzi himself. Howe promised a phenomenal 8% per month return, which, when compounded, meant investors could double their initial deposit in nine months.

Sergei Mavrodi, also known as “Russia's Bernie Madoff,” ran an investment firm called MMM that offered 2,000% annual returns—and no minimum investment.

Joseph Francis Bartholomew aka the “Bernie Madoff of Orange County,” has been accused of operating a Ponzi scheme that bilked investors of $11 million, promising returns between 15 and 40% from products based on fraudulent insurance policies.

Angela Dawn Campbell, a North Carolina woman who claimed to be running an online brokerage and investment business that was actually a $1.6 million Ponzi scheme, promised investors they could double or triple their investments.

Previous 1 2 3 4 5 6 Next

In Depth

Q&A: Portfolio Advisors' Brian Murphy On The Advantages of A Private Markets Platform

Jan 2 2018 | 11:05am ET

Most private markets firms reference their platforms as a source of competitive...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Steinbrugge: The Top Hedge Fund Industry Trends for 2018

Jan 2 2018 | 12:22pm ET

Each year, Don Steinbrugge’s Agecroft Partners compiles the insights gained...

 

FINalternatives Trending

From the current issue of