High-Yield Investment Programs, HYIP
A ruinous scheme in which con artists lure unsuspecting investors into believing that their funds can be used to purchase securities (PRIME BANK GUARANTEES [PBG's or BG's], DEBENTURES, Treasuries, PROMISSORY NOTES, LETTERS OF CREDIT) at enormous DISCOUNT and sell them for equally enormous profits, typically during a forty-week turnaround.
High-Yield Investment Program con artist call their scam by many different names.
They may call their scheme a Roll Program or Trade Program or Enhancement Program. ASSET MANAGEMENT is another popular term; or, they may call it nothing at all. Regardless of the title, this is the one scam in which all possible financial terms are put to misuse.
You are told that they do not need a BROKER'S LICENSE, which is an outright lie. They will toss around so many confusing banking terms that you don't know which way is up.
One line of patter involves ARBITRAGE, the purchase of FRESH-CUT SECURITIES from a CUTTING HOUSE which are then sold to the SECONDARY MARKET, FORFAITING, DISCOUNT HOUSES or DISCOUNT BANKS, Self-Liquidating Loans, or a combination of all of these.
New twists are sometimes heard, but the basic system is always the same - LETTERS OF CREDIT, Prime Bank Notes or PRIME BANK GUARANTEES, DEBENTURES or other securities; 3) the securities are then "sold on the SECONDARY MARKET"; 4) the whole thing starts over again because there are "X" number of trades per week, month, day... and profits are "enormous"- ranging from 500% to 1700% per year, per month, per whatever; and 5) a portion of the profit goes to the investor.
There are other scenarios touting involvement in INFRASTRUCTURE LOANS supposedly guaranteed by the WORLD BANK, the INTERNATIONAL MONETARY FUND, or Swiss Banks, mixed with PARALLEL ACCOUNTS and accounts over which the investor supposedly has sole control..
In every case funds disappear, never to be seen again. So what happens to your money? It goes toward paying old and new investors PONZI-fashion; it goes into travel, scam expenses, yachts, entertaining, jewelry, more scam expenses, houses, bribes, Mercedes-Benzes, gambling, etc.
The way in which securities are used in no way allows for the kinds of profits described by these fraudsters; however, because fraudsters use half-truths and because it is difficult for the layman to understand the actual uses of some securities and international finance procedures, fraudsters are able to excite the imagination of their targets beyond and away from the normal bounds of an investor's prudence.
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