The following are tips from Daniel Wardlaw, special agent and public information officer IRS Criminal Investigation to help avoid being victimized by a ponzi scheme:
- Discuss investment ideas with an unbiased third party such as an attorney; an accountant; or a licensed financial advisor
- The historical average stock market returns are around 8 to 12 percent a year. Investments which claim to be able to exceed these amounts (for example 2 percent a month or 300 percent a year, etc.) should be viewed very skeptically. If it sounds too good to be true, it probably is.
- Don’t trust someone with your money (whether for investment or for loan) just because you know them or because they have an impressive or “safe” sounding title
- Avoid secretive investments where you have difficulty in determining how they work or when you will get your money back
- Check out official websites such as for the SEC, the FBI or the Washington Attorney General’s Consumer Protection Division to see if the investment being offered has characteristics of a scam
- A good summary of ponzi schemes and other red flags can be found athttp://investor.gov/investing-basics/avoiding-fraud/types-fraud/ponzi-scheme
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