A ponzi scheme is a scam that pays out current investors with money from new investors. They prey on the trusting --but there are several red flags that should make you reconsider an investment "opportunity".
Be wary of any investment that guarantees high returns of 50-100 or even 200 per cent. There's no such thing! The higher the returns the higher the risk. If someone could really make that big a return would they be sharing the secret? Scam artists like to pressure you into making a quick decision by suggesting they have insider tips about a company that the general public doesn't have. And while we like to think our friends can't be wrong -- they can! Early investors often seem to be getting big returns --they're true believers --and will be encouraged to bring in new recruits.
Your best defense is to check out everything about the person behind the investment opportunity - no matter how trustworthy he seems. I would ask to see their ID. And then I'd check for their name on the disciplined persons list of the BC Securities Commission-which includes Alberta actions.
Most provinces have a securities regulator and a searchable database. Sometimes just Googling a name and sifting through what you find --is enough to make you think twice about turning over your money.
With a report from CTV British Columbia's Chris Olsen.
