Ponzi Scheme

The world of the financial market attracts crowds of trustworthy and not so honest investors alike, turning the capital market into a fertile field for scammers scouting for victims that can finance their illicit business. It is relevant to analyze this issue because these types of scams or fraud are becoming more numerous. The present investigation describes the basic concepts of a pyramid fraud also known as a Ponzi scheme, its risks, and historical background. It was possible to observe the realization of economic fraud in the Ponzi scheme modality, in which users were offered great economic benefits in exchange for large sums of money deposited to companies, among which we find QUESTRA WORLD, ATLANTIC GLOBAL ASSET MANAGEMENT, QW LIANORA SWISS CONSULTING SA, FIVE WINDS ASSETS MANAGEMENT, BITLEY’S.

Among the organizers of this multi-million dollar scam with international edges are Constantino Mamchur, Czeslaw Pestyuke, Alendra Prochuhane, Fanis Juraey Stanislav Kravtovs and others. The same illicit activity was carried in the following countries: Ukraine, Russia, Kazakhstan, Poland, Ukraine, Germany, Kazakhstan, Spain, Poland, Austria, Belgium, Switzerland, and Slovakia. Places where investors have stopped receiving their monthly payments.

With all this information we proceeded to make a tour of the countries where these frauds were committed, with the purpose of gathering more information, On the same note we invited the people involved in the matter, discovering the depth of the deception and analyzing it in the present work showing how is it possible, how it happens.

HISTORICAL BACKGROUND

The Piramidal schemes are aimed at capturing people that want to save money, offering an investment alternative that promises high and guaranteed returns. In this “business” the client is made to believe that they have an account that grows permanently, with an “amazing” return. In general, there is no such account associated with the client, which we call “national account” The reality is that the money given by the contributors is used to pay the interests of the former “savers” for the profitability obtained by the alleged “good business” of the company. A “risk-free” investment is key to the pyramid scheme consisting in complying with the payment of the returns to the first round of clients, this is done in order to obtain the trust of old customers and attract new potential ones. Word-of-mouth advertising and through social networks is also crucial. These returns are paid with the contributions of the same clients. As the model becomes popular, the number of investors increases and the amounts they invest as well.  Ponzi schemes are known because of Charles Ponzi, a famous criminal of Italian origin who conned many people in the 1920s in the United States. However, it was also used before in Madrid, It was reported as the first pyramidal scheme, carried out by Baldomera Larra, it all started with a loan business.

Characteristics

  • The promise of high short-term returns.

  • Financial benefits that are not well documented.

  • Aimed at an audience with little financial knowledge.

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