The Corporate Fraud Investigator and the Ponzi Scheme – Atlanta Georgia

As a corporate fraud investigator you may be called upon to investigate any number of criminal and company violations. If you’re like me, or most other law-abiding citizens, most of the tactics and schemes used by these white collar criminals are as foreign to you as Chinese sign language. One such device is the Ponzi scheme; it resurfaced in popularity after it was expertly used by Bernie Madoff, the former stock broker and investment advisor who bilked his clients out of $18 billion and nearly $65 billion in gains.

Every corporate fraud investigator should be familiar with this scheme and how it works. A Ponzi scheme is a fraudulent investment opportunity that pays returns to separate investors from their own money or money paid by other investors, rather than from any actual profit earned. In other words, you invest your money with me believing that I’m investing in a company called Wally’s Widgets. At year’s end you see a sizeable return on your investment and believe that Wally’s Widgets is a great company. In actuality the money you received was from subsequent investors, minus my sizeable fee of course. The problem is that eventually I will run out of investors and the scheme will collapse on itself leaving my investors with a shell company (or companies) and no money.

The term comes from a Charles Ponzi who became known in the early 1920’s for using this scheme. He got a great number of people to invest in his business proposition but soon found himself using their money to pay off earlier investors and to support his own lifestyle. The Ponzi scheme usually entices new investors by offering returns other investments cannot guarantee, in the form of short-term returns that are either abnormally high or unusually consistent. This is just one more thing in a long list that a corporate fraud investigator needs to be aware of.

For more information about internal theft , white collar crime , employee theft or employee theft investigation contact us at corporate fraud investigator or call 1.770.426.0547 Kennesaw Marietta Atlanta Georgia