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How to spot a Ponzi scheme

Mar 07 2013 19:48

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Johannesburg - South African investors continue to fall victim to so-called Ponzi or pyramid schemes.

Lured by promises of massive interest or profit, they are soon fleeced of their entire “investment”.

These are not investments but elaborate scams that enrich the founder while eroding investors' capital in order to pay out unsustainable returns. As soon as new investment dries up, the Ponzi scheme collapses, leaving most participants severely out of pocket.

The latest scheme to hit the headlines is Net Income Solutions, which is alleged to have collected as much as R500m from investors through an opportunity marketed as Defencex. 

Here is a graphic illustration to help and prevent investors falling prey to such schemes:

Ponzi Scheme

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defencex  |  net income solutions  |  ponzi scheme  |  fraud

 

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