![]() In these investments, promoters offer the “little guy” a chance to pool money with other investors to buy bank notes internationally, often touting a large offshore bank as instrumental in the deal. Victims’ money is often filtered up through the pyramid and lost. Pyramid schemes are illegal in South Carolina, but are difficult to prosecute. An emphasis on getting others to invest.Investors pay large fees for products, courses, etc., or the right to recruit others and profit from their participation.At the meeting, a well-rehearsed presentation will downplay the traditional methods of acquiring money and will offer instead an exciting shortcut to wealth and adventure.An invitation from a friend, neighbor, or co-worker to attend an “opportunity meeting” to earn how to earn lots of money.The common elements of a pyramid scheme involve the following: The fraud derives from the ever-decreasing number of potential investors in a given area. Little mention or emphasis is placed on the product or service to be sold. Similar to the ponzi scheme, pyramid promotions focus on the quick profits to be earned from recruiting other investors, who then will recruit others, and so on. When the scheme collapses (as it always does), current investors lose their money and the promoters walk away rich. These schemes can continue only as long as new investors provide additional funds. In some variations, there may be an underlying business used as a “front” to make the scheme seem more legitimate. In a ponzi scheme, there’s no real underlying business, and investors are asked to buy shares in a business, or sign an “investment contract.” Then, early investors are simply paid with funds received from later investors. These “satisfied investors” then report the high returns to their friends, who in turn invest in hopes of achieving the same above-average returns. However, instead of using the money as promised, new investors’ money may be used to pay the monthly ìinterest’, “return”or “dividends” to earlier investors. Promoters offer high rates of return on various impressive-sounding investments. They are reluctant to let you discuss the investment with an impartial third person.Investment opportunities are in another country or are dependent on the participation of an offshore bank.They suggest that you invest on the basis of trust.Written information, state securities registrations, or verifiable references are not willingly provided.Requests are typically made for “identification” or “verification” purposes, or merely as an “expression of good faith.” Your credit card number is requested for ANY purpose.Recommendations are made based on rumors, tips, inside information, an unannounced new breakthrough, or the caller’s ability to predict future events.Investment is promised to be guaranteed or without risk.The caller is insistent on an immediate decision, or offers to have a courier driver in your area to stop by your home and pick up your check within minutes of the call.Be prepared to deal with investment scam artists. Many scams are a combination of techniques. The following is a list of the more familiar scams. ![]() Begin by contacting the appropriate regulatory agencies, such as the Securities Division, the SEC, or FINRA. Before you send money to anyone, you should investigate the company making the recommendation, the salesperson, and the investment opportunity by asking questions and checking references. The primary goal of the Securities Division of the Office of the Attorney General is to protect South Carolina investors from fraud and misrepresentation and ensure as fair a marketplace as possible for the trading of securities in our state. The sales pitch will change with the times depending on what scammers think investors will buy. As a potential investor, you may well find yourself solicited by telephone calls, mailings, door-to-door salespersons, as well as companies on the Internet. As an investor, your task is to sort out those investments that have the greatest potential in order to meet your personal goals. In today’s complex financial world, there are many opportunities awaiting you.
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