Investment scams - financial scams - Ponzi schemes
WHERE DID MY MONEY GO?
What scammers do with your money.
Money acquired by swindlers is quickly transferred to their own accounts or simply withdrawn and put in their pockets. In some instances, particularly in large frauds involving thousands or millions of dollars, the money is laundered before being spent by the swindlers.
When your money has been laundered, it is passed through a system of accounts set up to make the funds appear legitimately obtained. (see MONEY LAUNDERING) If your money has been laundered, you have a chance of recovering a portion through Federal seizure of assets and public auction (NOTE: This does not include money sent to Nigerian or Eastern European-style scammers). Recovery through the private sector - through legitimate financial recovery specialists - is frequently faster and far more successful but is very expensive.
List of swindler business expenses:
1. Putting on the dog. Financial swindlers and their partners need to look extremely successful in order to persuade you about their claims. This means jewelry, expensive clothes, cars, homes, etc.
2. Bribes. Financial swindlers, especially international ones, sometimes have to bribe bank officers, attorneys, law enforcement (sorry, but this is true), and other parties who must be paid to look the other way.
3. False returns to victims. Word of mouth is the best marketing ploy available to an investment scammer. To establish a reputation as a good value, the scammer sends investment returns to some of first investors using the investors' own funds or funds acquired from other investors.
Example: John invests $100,000 with a promise of a 300% annual return (an impossible rate of return). After 2 to 4 weeks, the scammer gives John his first return on investment. But John's funds have never been invested in anything other than the scammer, and what Jon receives is merely a portion of the funds he handed over for investment. John spreads the word that he received his first return as promised, more initial investors jump on board, each receiving a token return paid with their own funds or those of subsequent investors. And so it goes for as long as the scammer can keep old investors on the hook and continues to acquire new investors. This is called a Ponzi scheme. The normal run for a Ponzi scheme is 2 years.
4. Outside Men. Outside men (brokers, intermediaries, agents, mandates) are those who knowingly target you as a potential victim, qualify you as good financial resource, and introduce you to the inside man (the one running the show). These people have to be paid a percentage of the "take."
5. Travel. Also knows as "the getaway." Con artists do not hang around in order to give you a chance to throw them in jail. They are off to the Bahamas, Switzerland, Florida (a popular jumping-off place to the Bahamas), Panama, Belize, Antigua ... I think you get the idea. Preferably a country that does not have cooperative banks and/or extradition arrangements with the country in which you live.
What's left over is spent on pleasure, gambling being at the top of the list. Most con artists have empty pockets within days of perpetrating a scam.
5. In the case of Nigerian and Eastern European-style scammers, in addition to personal pleasure, real estate, and luxury items, money is put into other criminal enterprises such as international theft rings, drug trafficking, human trafficking, kidnapping rings, electronics, scam ring expenses, and possibly terrorist activities.
We are not attorneys and don't pretend to be. In our experience, the information and guidance offered on this site have proven to be effective; however, we always recommend that you consult with an attorney.
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