Why is it dangerous to invest in a Ponzi scheme?

On Behalf of | Aug 4, 2021 | blog, Criminal Defense

Placing your hard-earned money in an investment with the expectation of receiving your funds back and an additional high return can be enticing, especially if the results will be lucrative. Learning about this type of opportunity and investing should be considered and examined carefully before completing a transaction with a money manager in Pennsylvania. Promising to generate a return higher than average expectations may be performed using unscrupulous methods associated with a Ponzi scheme. Getting involved in this type of investment can be dangerous financially, presenting the risk of losing all your funds.

Why is investing in a Ponzi scheme dangerous financially?

Investing your money requires due diligence and trust. If you’re presented with an investment opportunity where you can receive a higher return on your money, it may be due to an unscrupulous money manager operating a Ponzi scheme. With this type of investment scam, the entity you’re giving your money to will solicit other investors and use their investment funds to pay you back. Keeping this process going requires new investors constantly. Otherwise, the whole scheme falls apart and you lose your money along with every other investor in the scam.

If you’re considering an investment with a money manager or other financial representative and want to ensure it’s legitimate, having the documents examined for inconsistencies may be highly beneficial in exposing the potential for criminal acts. One of the most significant examples of this process occurring and wiping out thousands of investors’ funds was completed by Bernard Madoff. Knowing you aren’t involved in this type of financial scam should bring peace of mind when you’re thinking about investing.

Whether you’re already involved in an investment and have a bad feeling about it or you want to have documents investigated before you part with your money, hiring an attorney for help can be essential in protecting your wealth.