Ponzi Fraud & Schemes

Have you fallen victim to a Ponzi fraud or scheme? Get in touch and take the first step to recovering what’s rightfully yours.

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Ponzi fraud

How does Ponzi fraud work?

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    What is a Ponzi fraud?

    A Ponzi fraud scheme is a highly fraudulent type of investment and trading scam which promises investors high rates of return for very little risk. This type of scheme generates returns for early investors, with money then taken from investors later on.

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    How does it work?

    In the same way that pyramid schemes fizzle out, Ponzi fraud schemes always dry up when new investors begin to slow and there isn’t enough money to be shared around, it is at this point that most Ponzi fraud schemes begin to unravel and investors see the truth behind their investments.

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    False results

    With Ponzi fraud, investors are typically promised large amounts of money if they choose to invest, with the attraction of generating a significant return on their investment. At first, soon after they make the investment, it appears as though the scheme is working.

How to spot a Ponzi fraud scheme

Guaranteed return

There are some warning signs of Ponzi fraud schemes, including: You’re told that you’ll get a guaranteed return, with little to no risk involved. With genuine investment opportunities, any potential risk of losing money is explained, You feel pressured into making quick decisions which you might not be comfortable with.

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Negative reviews

You may find negative reviews online, or complaints on their social pages, the terms they use sound like jargon and they confuse you with complicated terms, you’re not sure how the scheme works and the investors involved are unwilling to tell you more, there are issues with receiving paperwork or official documents, if you request to cash out, you are given a list of reasons why you should keep your money invested.

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Financial Services Register

If you are ever in doubt about a trade, then you can always check the Financial Services Register to see if the company is regulated by the Financial Conduct Authority (FCA), or feel free to contact us and we can provide you with confidential advice.

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Why WRS?

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Recovering over £40,000,000 for clients like you

Over the past 3 years, we’ve recovered more than £40,000,000 for our clients. It’s thanks to our team of solicitors and recovery claim specialists who trace and recover the investments you’ve lost from scams. Plus, we offer a no-win, no-fee service. You won’t pay a thing unless we recover your money.

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Falling victim to fraud can be overwhelming and distressing. You deserve expert guidance and support every step of the way. That’s what we’re here for.  

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Frequently asked questions

  • Where did Ponzi fraud originate?

    The term “Ponzi scheme” was named after scammer Charles Ponzi back in 1920. Charles Ponzi’s original scheme was targeted towards the US postal service in 1919 which, at the time, had developed international coupons which allowed senders to pre-pay for postage and include this within their written correspondence. The recipient would take a coupon to their local post office and then exchange it for the priority airmail postage stamps that were needed in order to send a reply. This became known as arbitrage, which was not an illegal practice, but Charles Ponzi became greedy and soon looked to expand on his efforts.

    He headed the company, Securities Exchange Company, where he promised returns of 50% within 45 days and 100% in 90 days. As a result of his stamp scheme’s success, more and more investors became interested. But, instead of investing the money, Ponzi just redistributed it amongst the investors, telling them that they had made a profit.

    This lasted until 1920 when The Boston Post started investigating Ponzi’s company and, as a result of this, Ponzi was arrested and charged with mail fraud, later sentenced to five years in prison. The story of Ponzi fraud is an interesting one and, although Charles Ponzi was caught and charged, it has not stopped scammers from attempting similar schemes over the years.

  • Why are Ponzi schemes so well known?

    Ponzi fraud schemes have been around for well over a hundred years and that means, unfortunately, there have been many victims of Ponzi scams in that time. There are some famous cases, such as Charles Ponzi, who the scheme was named after, and Bernie Madoff who executed the largest Ponzi scheme in history. The scheme was also used by the “Wolf of Wall Street” Jordan Belfort, with his story becoming well known in recent years as a result of the movie, alongside other scams such as Pump and Dump schemes and Boiler Room fraud.

    Even though Ponzi fraud schemes have been around for such a long time, this doesn’t make them any easier to identify. It’s hard for investors to realise that they have fallen victim to a Ponzi scheme until after its demise. Although Ponzi fraud schemes are more well-known now, this doesn’t mean that fewer people are getting involved with the scheme, it is just getting harder for them to spot the signs.

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