Just pause to consider the following headline run in the venerable Financial Times in November 2020: “Investors lose £657 million to fraud.”
That’s just in the 12 months to September 2020, up 28% from the year before.
Even before the full impact of Covid-19 was felt on the global economy, CNBC reported that in 2019, authorities in the United States had uncovered 60 alleged Ponzi schemes. In total, this equated to $3.25 billion in investor funds.
Quoting from the Ponzitracker website, CNBC went on to say that this figure was more than double that recorded in 2018, and the highest since 2010. All eyes will now be on the complete 2020 figures as they emerge, given the implications of coronavirus for economies merged with the constant search for yield in a low-growth environment.
History, of course, tells us that Ponzi schemes and financial scams are nothing new. However, their sophistication in the online space and in a digitally connected world are tailor-made for casting a wider, global net that lures potential investors with promises of 20% or 30% returns – or, in one recent incident, interest of 7% a week.
A litany of warning bells
Schemes designed to part you and your hard-earned capital have a long and notorious history, perhaps most famously with Charles Ponzi’s original 1920s creation.
More recently, in South Africa, we saw the 2007 Fidentia investment scam which resulted in mastermind J Arthur Brown being sentenced to 15 years in prison for fraud in…