TAG | Internet-based investment scams
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WASHINGTON — July 15, 2010–The Financial Industry Regulatory Authority (FINRA) warned investors today about Internet-based Ponzi schemes called high-yield investment programs (HYIPs), which purport to offer returns of 20, 30, 100 percent or more per day. HYIPs are unregistered investments sold by unlicensed individuals using sophisticated-looking websites.
As noted in FINRA’s article, the con artists behind HYIPs are experts at using social media — including YouTube, Twitter and Facebook — to lure investors and create the illusion of social consensus that these investments are legitimate, but investors should know that HYIPs are just Internet-based scams.
As FINRA’s investor alert HYIPS–Hazardous to Your Investment Portfolio points out, many HYIPs have a worldwide reach: the recently exposed Pathway to Prosperity scheme allegedly defrauded over 40,000 investors in over 120 countries of $70 million. The Federal Bureau of Investigation has reported that the number of new HYIP investigations during fiscal year 2009 increased more than 100 percent over fiscal year 2008. In order to help combat this growing online fraud, FINRA will be using search engine advertising to direct online investors searching for HYIPS to today’s Investor Alert.
”HYIPs are old-fashioned Ponzi schemes dressed up for a Web 2.0 world. Some of these schemes encourage people to bring in new victims, while others entice investors to ‘ride the Ponzi’ by attempting to get in and get out before the scheme collapses,” said FINRA Senior Vice President John Gannon. “By using Google AdWords, we are hoping to reach anyone searching the Internet for HYIPs before they fall into the hands of con artists.”
The FINRA article goes on to say that HYIPs display multiple signs of fraud, including the promise of extraordinarily high returns. For example, the Genius Fund HYIP at one time promised 36 to 40 percent daily, with two-day yields of 106 percent. Many of the con artists behind HYIPs use existing investors to keep their Ponzi schemes growing by paying current investors “referral bonuses” of up to 25 percent for bringing in new recruits.
This information was posted on FINRA’s website.
Call a FINRA Securities arbitration lawyer for a free consultation on how to recover stock losses and securities losses. Call 888-760-6552, or visit www.stockmarketlawsuit.com. Soreide Law Group, PLLC. Representing investors nationwide before FINRA and the NFA.
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