Saskatchewan Federation of Police Officers 95 Fraud Cent$ Toolkit for Seniors Helping Seniors Avoid Fraud PONZI / PYRAMID SCHEMES Ponzi Schemes pay returns to investors from other investors rather than from a profit earned. They usually offer shortterm returns that are quite high that other investments cannot guarantee. Reference: www.wikipedia.org In pyramid schemes, money is exchanged mainly for enrolling other people into the scheme; often a product or service is not included. No new money is created, therefore, investors who get in early take their profits from investors who join later. At some point, no new investors can be found and the investors at the bottom of the pyramid lose their money. Note: It may be a friend, relative, or immediate family member who asks you to invest your money—be sure to get all the facts before investing with them. References: www.wikipedia.org and www.PhoneBusters.com What You Can Do About Ponzi / Pyramid Schemes Before you invest any money: • get all the facts about the company, its officers, and its products; • get written copies of the company’s marketing plan, sales literature, contracts, and prospectus (a legal document that gives prospective investors information about the company); • avoid promoters who fail to clearly explain their plans. Have a lawyer or accountant explain anything you do not understand; • find out if there is a demand for the product, or if there are similar products on the market; • be wary of investments with very high and/or consistent returns; • remember that the greater the promised return, the greater the risk. Report investment fraud to PhoneBusters. If you are a victim, contact the local police (if applicable) or the local detachment of the RCMP.
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