PONZI SCHEMES

Vaibhav Mitruka
Shubh Tulsyan
Abhishek Basumatary
Apporv Srivastava
Manas Bajpai
WHAT IS A PONZI SCHEME ?
A ponzi scheme is a fraudulent investment operation
that pays returns to its investors from their own money
or the money paid by subsequent investors, rather than
profit earned by the organization.
Offering investment products with extreme high
returns in investments that actually dont exist.
They dont invest the money, but pay the promised
returns with the investors own money.
The money of new investors is being used to pay the
old investors.
STEPS IN THE PONZI SCHEME:-
Convince a few investors to place money into the
investment.
After the specified time, return the investment money
to the investors plus the specified interest rate or return.
Pointing to the historical success of the investment,
convince more investors to place their money into the
system.
Repeat steps 1 through 3 a number of times. During
step 2 at one of the cycles, break the pattern. Instead of
returning the investment money and paying the
promised return, escape with the money and start a new
life.
KEY ELEMENTS OF PONZI
SCHEME:-
The Benefit
The Setup
Initial Credibility
Initial Investors Paid Off
Communicated Successes
COMMON POINTS TO MOST
INVESTMENT FRAUDS :-
Abnormally High Guaranteed Returns
High Initial Investment
Vague or Complicated Investment Strategy
Unsustainable Business Model
Offers of exclusivity and paying back of losses
SOME RECENT SCAMS IN INDIA
THROUGH PONZI SCHEMES :-
Name of the Size of the Remarks
Company Scam
(Rs. in crore)

Speak Asia 2,500 The company promised Rs.

4,000 monthly income of an
initial investment of Rs.
11,000.

Social Trade 3700 The company gives daily

likes and the principle was
just tripled in a year.
NEWSPAPER ADVERTISEMENT
SOCIAL TRADE MODEL
PERQUISITES
PROTECTION FROM PONZI
SCHEMES:-
Investors should be suspicious if their investments
constantly outperform competitors or offer returns
above the legal rate or market rate.
Investors should not accept vague explanations
from advisors.
Beware of secrecy. If an investment is legitimate,
there should be full disclosure about it.
Investments should not be based on the irrational
excitement of others.
PROTECTION FROM PONZI
SCHEMES:-
Promises of high returns are a red flag for any
investment.
Avoiding investments you dont understand or for
which you cant get complete information.
Be suspicious if you dont receive a payment or
have difficulty cashing out your investment.
Be suspect of an investment that continues to
generate regular, positive returns regardless of
overall market conditions.
THANK YOU..