Member Article

Solicitor warns of Ponzi scheme dangers

Ponzi investment schemes are the latest focus of attention for the Serious Fraud Office.

This devastating type of investment fraud involves promising returns to existing investors through funds contributed by new investors.

New investors are often attracted by claims that their funds will be invested in low-risk, high return opportunities.

Often there is no legitimate investment activity, the perpetrators focussing on accumulating new money that has been promised to earlier investors.

Financial crime solicitor at Short Richardson and Forth LLP, Andrew Swan noted that these schemes were dangerous.

He said: “Investors lose their life savings on such frauds and often they are vulnerable elderly people.

“If something looks too good to be true, then it very often is.”

Such schemes are named after fraudster Charles Ponzi who conned thousands into investing in a postage stamp speculation scheme in the 1920s.

In June of this year three people stood before Bradford Magistrates, charged under the Proceeds of Crime Act 2002 for their involvement in an alleged £10 million Ponzi scheme.

A fourth defendant was also extradited from Spain a month later, charged with conspiracy to defraud for his involvement in the case.

This was posted in Bdaily's Members' News section by Ruth Mitchell .