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Wayne Parsons
Wayne Parsons
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Hawaii Hit With Another Ponzi Scheme

3 comments

Just recently, a man from Southwest Florida was arrested for running "what investigators call a classic Ponzi scheme" that targeted investors who were mostly located in Hawaii.

According to the article on ABC-7 News:

[The defendant’s] company – Cyber Market Group – would convince investors to loan his firm at least $30,000 to be invested in foreign currency.

In return, those investors were allegedly promised weekly interest payments of up to 10-percent.

Federal authorities say Rakotonanahary collected more than $10-million from unsuspecting investors and that he only invested $1.8-million.

Authorities say he used $8.4-million to pay previous investors and then kept $1-million for himself.

"This resulted in 64 Hawaii families liquidating their retirement savings or equity in their homes," said Charlene Thornton, FBI Special Agent in Charge, Hawaii.

Stories like this aren’t new- in fact, business schemes like this are named after an Italian swindler named Charles Ponzi, who became famous for using this technique in the early twentieth century. Just recently, Bernie Madoff was sentenced to 150 years in prison for orchestrating what is arguably the most famous Ponzi scheme in history.

It’s not like people aren’t aware of this method of swindling, so why do people still fall for it? According to a US News article, there may be many reasons. Schemers may prey on their victims’ desire to get-rich-quick, which can sometimes be overwhelmingly tempting, especially if the victim has fallen on hard times. Schemers may also pass themselves off as reputable investors or financial planners, which may sway some doubts that the victims may have about the safety of their money. This is especially effective if the schemer has already extracted money from people that the victim knows personally, since it creates the mentality of "my boss/pastor/child’s teacher/co-worker has given them money, so they must be trustworthy".

Schemers also use classic marketing tactics such as reciprocity (where they will treat you to a small favor- like a free meal- in order to make you feel obligated to invest) and the "limited supply" technique (where they convince you to act quickly on their offer because they don’t have many spaces left in their program).

It is important for you to be very, very careful with your money, especially in this economic environment. Remember- if it sounds too good to be true, it probably is.


3 Comments

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  1. Tex says:
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    If you think Madoff ran a huge scam, Amway has ripped off millions of people for several decades, to the tune of 10s of billions of dollars.

    Amway is a scam, and here’s why: Amway pays out as little money as they can get away with, so they support the higher level IBOs ripping off their downline via the tool scam.

    As a result, about 99% of IBOs operate at a net loss, while the top 1% make several TIMES more from their Amway tool scam than from the Amway products. This was made illegal in the UK in 2008, but our FTC is unable to pull their heads out of their butts to stop it here.

    Read about it on this website: http://thenetprofitgroup.yolasite.com and forward the information to everyone you know, so they don’t get scammed.

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    It does seem these days that many of the apparantly legitimate businesses are little more than scams. Look at insurance companies like AIG.

  3. Tex says:
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    AIG has many legitimate pieces, it was the illegitimate ones that got the attention. Are you the type of attorney who would be involved in going after Amway, or do you know one that would be?