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What is a Ponzi scheme and how does it work?

On Behalf of | Oct 29, 2020 | White Collar Crimes

Ponzi schemes in Oklahoma and elsewhere in the country are scams that typically prey on people who want to make money on the stock market but don’t know where to start. The fraudulent investor promises large returns with little or no risk. Unfortunately, the scam often collapses in the end and leaves the investors with nothing.

What is a Ponzi scheme?

When an individual falls victim to a Ponzi scheme, a scammer promises to invest their money in low-risk stocks with high returns. The victim might receive a few payments in the beginning, but the money isn’t coming from their investments. Instead, it’s coming from other people who invested money in the scam.

Rather than invest the money, the scammer keeps the money and uses some of it to pay off their other clients. They keep the rest of it for themselves. Like other white-collar crimes, a Ponzi scheme falls apart when the scammer loses their constant cash flow.

What are signs that an individual might be running a Ponzi scheme?

If an individual claims that they can offer high profits with little risk, they might be running a Ponzi scheme. Most high-yielding stocks come with a high or medium risk. You might also be dealing with a Ponzi scheme if the individual has a complicated, secretive strategy that they refuse to explain. Additionally, you might be dealing with a scam if the individual doesn’t want to let you cash out.

What should you do if you’ve been charged with a white-collar crime?

If you’ve been charged with a white-collar crime like fraud, embezzlement, bribery, identity theft or tax evasion, you may wish to hire a criminal defense attorney. An attorney might be able to help you protect your reputation and business.


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