Steps of a Ponzi Scheme Iowa Investors Should Be Aware Of

In a recent article, we explained more about Ponzi schemes and how investors are promised high and abnormal returns or dividends for their investments. Although scam artists may show investors numbers, they are exaggerated earnings in order to trick investors out of their money.

Although Ponzi schemes are basic Iowa financial fraud schemes, they are powerful and entice investors out of their money. The people who run Ponzi schemes follow basic principles that include:

Convince Investors: A scam artist is first going to convince a few people to invest their money with him.

Establish Credibility: The person running this Ponzi scheme has to be credible. Investors do not want to leave their money with just anyone. It needs to be someone already in the financial and investment industry who has a good name and has years of experience.

Return Investments: For a period of time, investors will receive the promised rate of return or better so that investors will not be questioning the operations or leery about the person who has their money.

Convince More Investors: Because the early investors will receive their promised investment back, their success is used to entice more investors into the operation. This way other investors are hearing of the success and are more willing to put their money into it.

Break the Pattern: At some point, investors will stop getting returns and the scam artist will take off with the money. Consumers will be left as victims of investment fraud in Iowa.

For more information on Ponzi schemes, read our article How to Avoid Becoming a Victim of Financial and Investment Fraud in Iowa. If you have been a victim of investment fraud or financial fraud in Iowa, please contact an experienced Cedar Rapids financial fraud lawyer today at the law firm of Brady Preston Gronlund at (319) 866-9277 for a free legal consultation.