Protect Your Pockets:
Understanding and Avoiding Ponzi Schemes
by Indiana Secretary of State Todd Rokita
When you hear about people
from new investors, making it
getting conned out of their
seem like his nonexistent business
money, it can be easy to think,
was doing well.
“I’m too smart to get scammed.”
However, as details continue
Ponzi schemes typically fall
to unravel in the alleged
apart when the fraudster doesn’t
$50 billion Ponzi scheme
have enough money to pay
perpetrated by Bernard Madoff,
returns to investors. In early
Never rely solely on the
people across the nation are
December, Madoff struggled to
testimony of others and be
recognizing a harsh reality:
fulfill requests from his clients to
skeptical of promises of high
anyone can become a target of
redeem $7 billion from the hedge
returns. One red flag with
fraud.
fund.
Madoff was that his hedge fund
generated consistently high
Madoff managed a high-
To avoid falling victim to
returns, even when the market
profile hedge fund - a portfolio
Ponzi schemes, make sure you
fluctuated.
of investments that often
investigate before you invest.
carries a high risk, but aims to
Use the searchable databases on
If you feel you have been the
generate high returns. Hedge
www.indianainvestmentwatch.
victim of a Ponzi scheme or
funds are typically set up as
com or call 1-800-22-8791
investment fraud, report it to the
private investment partnerships
to make sure an investment
Indiana Securities Division by
that usually require an initial
and/or an investment advisory
calling 1-800-22-8791.
investment of between $250,000
firm is registered with either
and $1 million.
the Indiana Securities Division
or the Securities and Exchange
Madoff had more than 100
Commission.
charities, businesses and
individuals investing in his
hedge fund. He later confessed
that the fund was part of a Ponzi It’s all about
Rebecca’s Head Dresses at
scheme.
the Hat!
Derby Hat Central
Newlin Hall at the 4-H Fairgrounds
The term Ponzi scheme
2818 Green Valley Road
comes from a scam operated
New Albany, IN 47150
by Charles Ponzi in the early
1900s. Ponzi recruited investors
Open: April 7 - May 2
Monday-Friday 10am - 9pm
by promising high returns. He
Saturday 10am - 6pm
was able to pay returns to initial
Sunday 12pm - 5pm
investors with money collected
812-944-7047
12
March/April 2009
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