It's almost as if the plague hit Wall Street...first the credit crisis ( which of course was preceded by the subprime mortgage mess and followed by the current recession)and along its heels comes a ponzi scheme the size of Godzilla!
Much has been and will be discussed about Bernard L.Madoff and his mad ponzi scheme.
By some accounts,the $50 billion ponzi scheme created by Madoff can be labeled as one of the costliest financial frauds ever created by an individual.
As details slowly trickle in on the operations behind Madoff's ponzi scheme, i thought it would be worthwhile to go over some 'Do's and Don'ts' for avoiding a Ponzi Scheme.
- I found this general list on wsj.com
- According to this one which is a little more specific, investors should be on red alert when an investment manager asks for checks to be made out to him or his company.
- This is what the FBI has to say about ponzi schemes (scroll down on the FBI page till you reach 'ponzi schemes')- exercise due diligence and make sure you fully understand the investment before you invest the money.
- Another nugget of advice from the Asset Protection Blog- Obtain independent advice and turn your back on "guaranteed" profits if they seem unrealistic. And of course, the common refrain that should be applied in everything: If it seems too good to be true—it probably isn't true.
" The scheme is named after Charles Ponzi, who became notorious for using the technique after emigrating from Italy to the United States in 1903. Ponzi was not the first to invent such a scheme, but his operation took in so much money that it was the first to become known throughout the United States. His original scheme was in theory based on arbitraging international reply coupons for postage stamps, but soon diverted later investors' money to support payments to earlier investors and Ponzi's personal wealth."
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