Ponzi Scheme

The Justice Department has unsealed indictments against seven individuals, all of whom are or have been affiliated with Platinum Partners L.P. (Platinum), purportedly a $1.7 billion hedge fund based in New York City. Charges Against Platinum Charged with securities fraud, investment adviser fraud, securities fraud conspiracy, investment adviser fraud conspiracy, and wire fraud conspiracy are …

Put as simply as possible, a Ponzi scheme is an investment fraud in which funds contributed by new investors are used to pay purported “returns” or “profits” to existing, earlier investors. A Ponzi schemer usually attracts new investors by promising to invest their funds in opportunities claimed to generate high returns with little or no …

Affinity: a natural attraction, liking, or feeling of kinship. Affinity fraud: a fancy name for ripping off fellow members of one’s own club, association, or religious, racial, ethnic, or social community. Several days ago, a former Mormon bishop was indicted by a federal grand jury in Connecticut. He allegedly ran a Ponzi scheme in which …

Cliches become cliches in large part because they resonate with truth. Here’s one of the best known cliches in all of investing. “If it sounds too good to be true, it probably is.” Most investors know that an investment’s return usually is commensurate with its risk. As a general proposition, higher return is accompanied by …