ponzi scheme haba yousif lassal inungu joe elian
TRANSCRIPT
Why you should care…
• A ponzi scheme can target anyone
• It is vital to understand what it is and how it works
• How to avoid it
• Effect on our economy
• Government actions toward these scandals
WHAT IS A PONZI SCHEME?
• Named after Charles Ponzi
• Also known as a “Pyramid Scheme”
• It is an investment fraud that promises high returns with little risk.
How to identify a ponzi scheme
• High Profit Returns with Little or no Risk
• Consistent Returns
• Unlicensed Sellers
• Unregistered Investments
• Private and/or Complex Strategies
• Issues with Paperwork
How a ponzi scheme fails
• Usually fails when there are no more investors.
• Collapses under its own weight
• Securities and Exchange committee discovers the Ponzi Scheme
Effects of Ponzi Schemes on Economy
Pump and Dump Method• http://www.youtube.com/watch?v=K6aVQDs
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Methodology of the Fraud
Over the Counter
Biggest Ponzi Scheme
• Chairman of Nasdaq
• He ran a $56 billion ponzi scheme for over a decade
• He was discovered by the Security Exchange Commission in 2008.
• Investors included banks, celebrities, and everyday hard-working people.
IT’S ALL FUN TILL YOU get CAUGHT
• Madoff pleaded guilty to all eleven felony counts.
• Sentenced to 150 years in jail.
• Madoff’s lawyer pleaded for 12 years.
• The judge was particularly moved by one victim’s statement.
What about the investors?
• http://www.youtube.com/watch?v=f23GM8EZo8I&feature=related
They are receiving…• Tax breaks• Payouts from the Securities Investor
Protection Corp.
• The tax breaks are helping out a lot of victims.
• Victims can recover a good 40% in their losses.
• However, it is not helping everyone.
After the Madoff SCANDAL…
• Legislators and judges are ruling tough sentences on people using a ponzi scheme.
• James Nicholson was sentenced to 40 years in prison for defrauding investors of $141 million.
• Martin Royster may be serving up to 10 years in prison for his $2 million ponzi scheme.
Public opinion
• $56 billion dollars gave Madoff many enemies.
• The scandal also played an important factor in Wall Street’s image.
• According to NBC and Wall Street Journal poll, it shows that 58% do not trust the stock market.
• Lawmakers are pressured by lobbyists to weaken the reform legislation.
The michigan case
• Reviewing Ponzi Scheme, it is important to understand what aspect should raise a red flag.
• For example in the Royster case he:• Promised a 240% annual return on investments• Investors received no financial statements• Royster didn’t provide any paper or
documentation that the products were registered with the state.