Regulators say the largest of these investments appeared to be nothing but Ponzi schemes. These notes are often sold to investors by independent life insurance agents. The perpetrators who diverted the money to offshore bank accounts, made first-class business trips to China, India and Greece and bought expensive cars even knelt in prayer with their victims to gain their trust. Scammers use the wide reach and supposed anonymity of the Internet to pump and dump thinly traded stocks, peddle bogus offshore prime bank investments and publicize pyramid schemes. Roughly half the states have Internet surveillance programs that watch for fraud or investigate investor complaints.
Regulators urge investors to ignore anonymous financial advice on the Internet and in chat rooms.
Always in style, these swindles promise high returns to investors, but the only people who consistently make money are the promoters who set them in motion, using money from previous investors to pay new investors. Inevitably, the schemes collapse. Ponzi schemes are the legacy of Italian immigrant Charles Ponzi. Redeeming the CD early may result in large losses upwards of 25 percent of the original investment. Her intention, she told her broker, was to use the money to pay her mother s nursing home bills.