The following report provides general information on Ponzi scams and was provided from the Alberta Consumer and Corporate Affairs Security Commission.
Ponzi scams resemble pyramid schemes where there is no true product or service being offered in exchange for the investment. Also, like a pyramid, early "investors" will usually receive funds as a result of the later "investors" cash. ALL Pyramid Schemes are illegal. The swindles are often disguised as transactions in new and poorly understood investment instruments. They usually do not involve an actual sale of products or services.
A Ponzi scam operates by using the funds from many investors to pay the first few. As the number of investors grows, and the supply of potential new investors dwindles, the Ponzi scam collapses under pressure of meeting the promised interest payments. Initial investors may receive interest payments but the vast majority end up losing their money.
A successful Ponzi scam usually depends on some of the following:
How to avoid Ponzi scams
If you would like more information, contact Alberta Securities Commission at:
Alberta Securities Commission
Suite 600, 250-5th St SW
Calgary, Alberta T2P 0R4
To phone within Calgary call 403-355-4151 or call toll-free at 1-877-355-4488.
For other related topics, please refer to the files on; Pyramid Schemes, Multi-Level Marketing, or the Recovery Pitch.