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How to tell if you’re in a Ponzi scheme

| Jan 11, 2021 | Federal Securities Law |

Ponzi schemes in Pennsylvania tend to prey on people who want to make a lot of money in a short amount of time. At the beginning of the scam, it might seem like you’re getting a good return on your investment. But when the scheme inevitably falls apart, you’ll likely be left with nothing. Here are some signs that you’ve been caught up in a Ponzi scheme.

How can you identify a Ponzi scheme?

You should be suspicious if someone promises you a guaranteed return on your investment. No investment is guaranteed to be profitable, and if your investment keeps earning money even when the market dips, you might be involved in a Ponzi scheme. You should also be wary if the person who supposedly invested your money won’t let you cash out. If multiple people leave, the entire scheme will collapse.

Investments that comply with securities law involve licenses and registration. You might be dealing with a Ponzi scheme if the firm doesn’t seem to be registered. Additionally, the people who work at the firm might be reluctant to give you more information about your investments. If they appear to be hiding information from you, that’s a sign that you should talk to an attorney.

How can a Ponzi scheme impact your life?

When someone runs a Ponzi scheme, they don’t invest the money that they promised. Instead, they pocket your money and use money from other investors to make you think that you’re getting a return on your investment. Eventually, people stop investing when they figure out what’s going on, and the entire scam falls apart, leading to losses for the investors. An attorney may be able to help you hold the firm accountable and recover some of the finances that you lost as a result of the Ponzi scheme.