Make us your home page
Instagram
ScamState | An occasional series on financial frauds

Ponzi schemes want your money to pay off first victims

Ponzi schemes are named after Charles Ponzi, who offered Boston investors outlandish returns by supposedly investing in postal coupons. Many investment scams are variations of the Ponzi scheme, in which early investors are paid off with money put up by later ones to encourage new, bigger "investments."

Example: First International Bank of Grenada raised more than $170-million from investors by boasting of interest rates as high as 300 percent, supposedly earned through trading. The bank claimed assets of more than $26-billion, but had less than $2-million. Deposits were "insured" by the International Deposit Insurance Corp. — little more than a fax machine. Jonathan Kremner of Clearwater, who worked for the bank as in-house counsel, was sentenced to 36 months' probation last year after pleading guilty to selling one of the bank's CDs to an investor and filing a false tax return. He assisted prosecutors in bringing money laundering charges against others.

The promise: You're attracted by tales of high returns, often "insured"
or "guaranteed."

The secret: Little or none of your money is invested; funds are used for sales commissions, investor withdrawals and promoters' lavish lifestyles.

The encouragement: Phony account statements show great returns, prompting enthusiastic investors to spread the word to others.

The letdown: The scheme collapses when flow of new money slows.

Tips for not being taken: Recognize that high yields always come with high risks. If you want an FDIC-insured account, get it from a bank. Check out investments and the people selling them with the Florida Office of Financial Regulation by calling toll-free 1-800-848-3792.

Ponzi schemes want your money to pay off first victims 04/12/08 [Last modified: Tuesday, May 20, 2008 5:06pm]
Photo reprints | Article reprints

© 2017 Tampa Bay Times

    

Join the discussion: Click to view comments, add yours

Loading...
  1. Florida turns over voter-roll data to Trump election commission

    State Roundup

    Florida provided voter-roll data to President Donald Trump's election fraud commission Friday despite a lawsuit by the ACLU of Florida attempting to prevent the state from providing the information.

    Kansas Secretary of State Kris Kobach, left, and Vice President Mike Pence, right, lead the Presidential Advisory Commission on Election Integrity, which is seeking voter data from every state.
  2. Wells Fargo charged 800,000 for unnecessary auto insurance, internal report says

    Banking

    Wells Fargo incorrectly charged 800,000 of its auto loan customers for unnecessary auto insurance, according to an internal report obtained by The New York Times. According to the report, about 274,000 of those customers were forced into delinquency on their loans, which resulted in 25,000 repossessions. …

    An internal Wells Fargo report obtained by The New York Times said the bank charged more than 800,000 people for auto insurance they did not need.  | [Los Angeles Times]
  3. Trigaux: Do we all need PhDs to fight scams, frauds and rip-offs?

    Business

    There are days when it feels like our school priorities are all wrong. Literature? Math? Computers? Nah. What everyone really needs to survive in the 21st century is a PhD in fighting the rise of increasingly creative consumer scams, frauds and rip-offs.

    As solar panels become cheaper and more popular, consumer agencies are starting to see a rise in consumer complaints about misleading and deceptive solar offerings. Solar scams are noted in a national report on major consumer complaints issued this week by the Consumer Federation of America and the North American Consumer Protection Investigators. [William Levesque, Times]
  4. Starbucks to close all Teavana locations, including five in Tampa Bay

    Retail

    Local Teavana locations include Tyrone Square in St. Petersburg, International Plaza and Westfield Citrus Park in Tampa, Brandon and Clearwater.

    Starbucks announced Thursday plans to shut down all 379 Teavana stores, citing "underperformance." Starbucks acquired the mall-based tea chain for $620 million in 2012. [ CANDICE CHOI | AP file photo]
  5. Trigaux: Closing Iron Yard coding school hits area tech hard but leaders talk of options

    Business

    The coming shutdown this fall of the Iron Yard software coding school in downtown St. Petersburg — announced this month as part of a national closing of all 15 Iron Yard locations — remains a shocking event to a Tampa Bay technology community that dreams big of becoming a major player in the Southeast if not …

    In better days last fall, friends and family of graduates at The Iron Yard, based in the Station House in downtown St. Petersburg, applaud during "Demo Day" when grads of the coding school show off their skills. Despite the local success and strong job placement by the coding school, The Iron Yard is closing all of its 15 locations across the country this summer. [LARA CERRI   |   Times]