Ponzi is becoming a household name. Thanks to Bernard Madoff who hustled off some $50 Billion by using the Ponzi scheme. Other purveyors of the Ponzi scheme are starting to appear in the news with alarming regularity. According to the Los Angeles Times six persons in Orange County were arrested for running a Poniz Scheme for a mere $52 Million.
The Ponzi Scheme is named eponymously for Charles Ponzi who was not necessarily its inventor but its first major user. The scheme entails some investment scam and using one investor’s money to pay another so that investor believes he is actually making money. I could be said you borrow from Peter to pay Paul, although both Peter and Paul both invested money with you. Of course, sooner or later, the Ponzi scheme, which is built on a house of cards, collapses and headlines are made.
Investors lose their fortunes and the Ponzi purveyors are fined and usually sentenced to jail. More often than not, only a fraction of the investors money, if that, is ever recovered. It’s a sad day for everyone with the possible exception of the news media who can milk these stores for weeks on end. But then they are fascinating and such is life.
The Ponzi Scheme and a variety of other scams are particularly pervasive in an economic downturn. People get desperate and launch fraudulent schemes, attracting equally desperate people hoping to recover their money. The object is not to be among them. Mainly, if it sounds too good to be true, then it probably is.
Whether it is for new business accounts for your company or personal investments, there are various means of corporate research to undertake to help assure your investment and your venture are best protected. There are business credit reports as well as Comprehensive Personal Background Checks that reveal much about someone’s personal and financial history.
In this economy it pays to be prudent, which means it pays to be cautious. Use background checks to see if your new prospective client or investment partner is someone you can trust with your money or goods and services. Avoid the embarrassment and loss of finances. Check them out before you do business.
