Certified fraud examiners at Resolute Commercial Services anticipate increased focus on and discovery of Ponzi schemes during the remainder of 2021.
“Ponzi schemes thrive when the economy is doing well and people have extra cash to spend,” says Nicole Manos, senior managing director at Resolute and one of the top forensic accountants in Arizona. “It’s after a year like 2020, when the economy takes a dip and people become more careful about how they spend their money, that we see Ponzi schemes begin to be uncovered.”
By definition, Ponzi schemes use money from new investors to pay earlier investors. This can continue for years, until the scheme becomes unsustainable because new investors can’t be found or too many investors ask for their money back at the same time.
Many financially successful business owners and individuals become targets of Ponzi schemes because they have the money to invest and are looking for high returns, according to Manos.
She and her team of fraud examiners at Resolute recommend asking yourself the following questions before moving forward with an investment.
1. Who will have custody of my investment? When making an investment, a custodian is in possession of your investment account and issues statements about transactions related to your account. A manager executes those transactions for you. Fraud most often occurs when these two roles are handled by a single…