Ponzi Schemes Promoters offer high rates of return on the various impressive-sounding investments. In a Ponzi scheme, investors are not in fact investing in an underlying business, even though they believe they are. Early investors are simply being paid with the funds received from later investors. The scheme only continues as long as new investors provide additional funds. These investments are similar in many respects to the advance-fee loan schemes described above.
Investments range from a few thousand dollars to a hundred thousand dollars or more.
Details about how the program works are either unavailable or, when examined closely, nonsensical. Investors' money is rarely recovered. These are classic frauds. Often, the promoter will base a mining forecast on an unknown expert's geological report or prediction, or will offer part of a valid report out of context. Promoters exaggerate the quality and quantity of the minerals to be extracted, while downplaying the expense or actual likelihood of recovering them.