Outrageous Ponzi Schemes Are Destroying Us, But How Do We Identify One

Outrageous Ponzi Schemes Are Destroying Us, But How Do We Identify One?


Charles Ponzi is a man associated with Ponzi schemes, but these fraudulent schemes were around way before him. The Ponzi schemes definition is a fraudulent scheme created by collecting money from investors. Then, without actually investing or using the money for the intended purpose, it is stolen by the owners.

Some of the new money coming in is paid to the old investors to keep the scheme going. Eventually, without enough new investors, the scheme collapses when older investors can’t get money out or fake returns collapse for any reason.


Unscrupulous people share a Ponzi schemes history that dates back a few centuries. Many people are greedy for fast, easy money. So, they convince themselves that it’s okay for dishonest people or businesses to create schemes to make money that destroys others’ lives in the long run.

One most famous Ponzi scheme Bernie Madoff invented went on for years. And sadly, he had lots of help from co-workers. Bad people create Ponzi schemes to make money. Many excuses are used to justify their fraud.


When you study a Ponzi schemes history of existence a few things are made clear. The recruitment of naïve, underinformed people who are friends and family helps to grow these fraud schemes. Psychology tells us our own friends and family would not defraud us so there is a strong tendency to believe they did their homework and the business is legitimate.

Because of this, there is a long Ponzi schemes history of entire communities or families losing money because one neighbor or one family member convinced everyone it was legitimate. Unfortunately, it was just one of a long list of schemes to make money for the owner.

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The Ponzi scheme Bernie Madoff created for his use went on for decades. He had many co-workers who helped him concoct an elaborate and horrible scheme to steal from his clients. He lived an elaborate life, buying mansions, yachts, huge parties, clothes, and jewelry. Both national geographic and Netflix are running docuseries about his elaborate scheme.

The Ponzi scheme Bernie Madoff created appeared legitimate because he had a fancy office on wall street, and connected it to a legitimate trading business.

But, Bernie Madoff and his associates stole the money his investors sent him to live their elaborate lifestyles. It went on for a long time because his image was a stereotype that satisfied the regulators who ignored complaints against him. He was eventually discovered when the economy collapsed into a recession and an unusual number of people ask for their money but did not get it. There was not enough new money coming in to satisfy the old investors.

How could investors have protected themselves? For one he was an individually owned company and according to the regulatory agency Finra.org, he was not a registered investment advisor. They could have been extra careful to recognize these facts and research his non-registered status. Instead, they went by his fake popularity. They could be suspicious of anything that appears to guarantee wealth or returns.



Ponzi schemes to make money are bogus businesses. They do not work. Because it is a circle of new investments to pay off old investors, it eventually collapses. The greedy person or people who start it eventually lose everything when their scheme is exposed, and most get arrested. Ponzi schemes to make money collapse in the long run because disgruntled people who lose money report them.

It is difficult to convince people to stay away from the Ponzi schemes to make money because they are greedy, trust their friends, and don’t do their research or read enough about these scams beforehand. It is a powerful and hidden money-making scam.


Unscrupulous people share a Ponzi schemes history that dates back a few centuries


First of all Ponzi schemes to make money are difficult to detect because they come in many forms.
Some appear legitimate because they operate out of a fancy office. This was the case with the Ponzi scheme Bernie Madoff operated. He claimed great investment returns, even though he did not invest the client’s money.

Some appear legitimate because they are sponsored by a large organization, such as multi-level marking organizations. They display pyramids that show how you can get rich by bringing people in, but the majority complain they did not get rich or make money. I have spoken to many people involved in these multi-level marketing pyramids and made no money.

Some are created and run by individual friends or family. One such is when someone calls to say we are looking for 10 people to invest $10,000 with our investment club now. We will share the profits. This happens over and over and no one ever sees profits, because the money is never invested. This was an actual case a friend experienced.

Many Ponzi schemes have been run by a licensed broker who worked from home as his or her own small business. They convince neighbors and family to invest with them, telling them profits are soaring. The money never gets invested, but instead is stolen by the independent home-based financial advisor or broker for his personal use. The popular show exposing scams, American Greed, has profiled many of these cases.

Ponzi schemes are difficult to detect because they come in many forms


Ponzi schemes to make money exist because many owners, no matter how kind acting, how friendly, just don’t have a conscious. They are greedy for an elaborate lifestyle or may have an expensive addiction such as gambling or drugs.

These problems are secret and well-hidden and are the best reason to stay clear of any individual who convinces you that this is a lucrative deal, you can get rich, get involved now, give you a 4-color brochure, or you will make a huge return on investment. These are your best signs to stay clear.

There is very little information to vet individuals until everyone loses all of their money. The latest and largest new Ponzi scheme is the cryptocurrency business. Many of them are not legitimate or regulated, but they continue to exist and steal clients’ money.

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Increase your prospects of safety by dealing with major corporations, that have been in business for a few centuries, that can be researched or vetted. Stay away from multi-level marketing companies, an individual working from home, a company that can’t be well-researched, or is unregulated.

One sign to look for are when a friend, neighbor, or family member comes to you and says this is a lucrative deal you have to get in now. Or, if they tell you to invest a large sum of money for a large return with a small group. Another is if an investment firm is not a “registered investment firm” in fine, such as in the case with Bernie Madoff. Some scams are listed at fraud.org, but most are not, since new ones are created daily. Be suspicious of everyone who approaches you.


One of the biggest schemes to make money is the difficult-to-detect, Ponzi scheme. The Ponzi schemes history goes back a few centuries but intelligent people continue to be duped by them. One of the largest Ponzi schemes Bernie Madoff created destroyed finances for thousands of unsuspecting people.

Ponzi schemes are purely schemes to make money by people with no conscious. They have been around for a long time, but work well because the schemers encourage clients to recommend their family and friends. Family and friends believe each other. A potential client can protect their finances by being suspicious of any individual who recommends a lucrative deal, a guaranteed rate of return uses heavy-handed encouragement. Check finra.org to see if your broker or investment firm is a registered investment advisor. Visit fraud.org for fraud prevention tips.

Outrageous Ponzi Schemes Are Destroying Us, But How Do We Identify One?

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13 Responses

  1. Lavanda Michelle

    It is always good to be cautious of these types of malicious scams even if you don’t think you will ever fall for one. Thanks for sharing your tips.

  2. Melissa Cushing

    They are everywhere these days right!? Crazy times fro sure…. technology has made this worse that is for sure but I know what t lok for now and will not have issues…. fingers crossed!

  3. I found your article on identifying Ponzi schemes extremely informative and eye-opening. The examples you provided were shocking but necessary to understand the signs of such fraudulent schemes.

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