Posts Tagged ponzi schemes
Real estate fraud has been running rampant over the past 10 years, especially during the time of Stated Income and No Doc loans where swindlers could arrange for straw-buyers to buy homes for the swindler with the promise of “investment groups” making the payments for them from dividends generated by the stripped equity from the home. These returns were said to be in the 5% to 12% PER MONTH range, not per year.
You saw this all the time, billboards on I-15 proclaiming “Use your good credit score to make $20,000 today.” These were either one-time payments by “investment groups” to the straw-buyer or promises of dividends far above what people would earn with traditional investments such as IRA’s and CD’s.
These are all Ponzi schemes. And although the No Doc and Low Doc loans have disappeared, the scam artists have not.
In most or all cases the “Investment Firm” disappeared with the money stripped from the equity of properties purchased by straw-buyers, leaving the straw-buyer holding the bag to make the payments on loans they can not afford.
How do you identify these fraudulent schemes? Here are some clues:
- If it seem too good to be true, it probably is.
- Are the presenters telling you the investment will pay far more than a bank or other common institutional investment would pay? Well, it probably won’t.
- Does the person pitching it say there’s only limited participation for a short period of time? Don’t be rushed into anything, take time to do some due diligence.
- Does the math make sense? A $10,000 investment at 10 percent a month for five years would grow to about $1.5MM. But who really could make that type of money legitimately?
- They tell you the investment is it “completely safe.” No investment is.
Check out the person offering the investment by calling the Division of Securities at 801-530-6600 or toll free 800-721-7233 or visiting www.securities.utah.gov
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- 2 Calif. men to stand trial in $200M Ponzi scheme (seattletimes.nwsource.com)
- Be Wary of These Homeowner Frauds and Scams (lanechase.net)
- Kemptville investment advisor guilty of fraud (cbc.ca)