web analytics
August 20, 2014 / 24 Av, 5774
Israel at War: Operation Protective Edge
 
 
At a Glance
Blogs
Sponsored Post
Jerusalem Mayor Nir Barkat (L) visits the JewishPress.com booth at The Event. And the Winners of the JewishPress.com Raffle Are…

Congratulations to all the winners of the JewishPress.com raffle at The Event



How to Avoid Being the Next Ponzi Scheme Victim

Three basic measures that you can follow to protect yourself from falling victim in a financial scheme.
Douglas Goldstein

Douglas Goldstein.

One of the main headlines in world financial news this August has been the fate of ZeekRewards.com, an online company that offered investors the chance to get rich quick. Interestingly enough, I heard about ZeekRewards before this company hit the headlines, when one of its salespeople contacted me and asked me to represent them. The very pushy salesman nagged me to set up a meeting, but the more he pushed me, the more uneasy I felt. So I decided to follow my mother’s adage of, “If it sounds too good to be true, it probably is,” and I didn’t meet him.

Reading the headlines, I’m very relieved with my decision. ZeekRewards offered promises of returns such as 1.5% of the investment at the end of each day and shares of 50% of the daily profits. Wouldn’t everyone want that kind of deal? However, this August, the Securities and Exchange Commission (SEC) filed an emergency action in a North Carolina federal court because this investment project was yet another Ponzi scheme.

The owners of ZeekRewards must have realized that many of these potential investors were going to ask questions. So, in a bid to protect themselves they added a clause for new users stating that they were not purchasing stock or any kind of “investment or equity,” and they even labeled the whole thing as an “e-commerce subscription.” The SEC saw through their ruse and said that this was not the case and in fact the company was offering its subscribers false securities. However, the average investor did not have the knowledge to understand what they were getting into, and the abovementioned clause probably sounded fair enough.

As people kept subscribing and playing the company’s game, investing and reinvesting, the company’s cash outflows began to exceed its total revenue, leading to a collapse and many unhappy subscribers who were left with nothing.

This time, there are more than 1 million victims of the scheme, making this the largest such bankruptcy case, with around $600 million at stake.

Interestingly, many observant Jews, both in Israel and America, have fallen prey to this scheme. It’s not the first time that Jews have been hit hard by Ponzi schemes (think Madoff).

This raises the question of why Ponzi schemes such as ZeekRewards are tempting to the religious Jewish community. One possible answer is that many religious Jews have large families and in this economic climate finances may be tight. Offer a person who is trying to find legitimate ways to support his family a way to make some extra money, and it’s tempting to find out more.

Sadly, as stated above, ZeekRewards is not a one-off story. Apart from desperation to make more money, another possible reason people fall for these schemes is that the scammers may have gotten smarter.

However, there are three basic measures that you could follow to protect yourself from falling victim in a financial scheme:

1. Remember my mother’s rule: “If it sounds too good to be true, it probably is.” ZeekRewards offered high gains for pressing a few buttons and looking at some ads. This is the first sign of something suspicious. When something sounds too good to be true, ask yourself, “What’s the catch?”

2. Do your research. One potential investor who decided against investing with ZeekRewards said that when he heard about it, he did his homework. He discovered that the company’s securities offerings were not registered with the SEC as required by U.S. federal law. Recognized authorities monitor investments for a reason; their absence speaks volumes.

3. Don’t feel pressured. If the company/salesman/friend keeps nagging you, saying that the investment opportunity will be gone if you don’t “buy now,” it may be wise to let the opportunity pass.

While there are no guarantees in the world of finance, taking these three steps will provide a basic level of protection against becoming a victim of the next Ponzi scheme that rears its ugly head.

If you are interested in hearing more about the biggest investment fraud in history, watch this TV interview that I did on the subject of Bernie Madoff. Although this was four years ago, the points remain the same. If anything, there are more frauds out there and we need to be more careful than ever. So be wary and tread with caution.

About the Author: Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd, a financial planning firm located in Jerusalem. He specializes in working with clients in New York, Florida, and Israel and is a licensed financial professional both in the U.S. and Israel. Securities are offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, SIFMA. Accounts held at Pershing LLC., Member NYSE/SIPC, a subsidiary of The Bank of New York Mellon Corporation. Neither Profile nor PRG gives tax or legal advice. Before immigrating to Israel, it is advisable to consult with a tax attorney who is knowledgeable about Israeli law. Doug’s newest book The Expatriates’ Guide to Handling Money and Taxes is available at www.expatguidetomoney.com. He hosts a weekly finance show, Goldstein on Gelt, on internet radio. Listen live or download podcasts. Toll-free from U.S. 1-888-327-6179, Jerusalem: (02) 624-2788. Follow on Twitter: @DougGoldstein or contact at doug@profile-financial.com.


If you don't see your comment after publishing it, refresh the page.

Our comments section is intended for meaningful responses and debates in a civilized manner. We ask that you respect the fact that we are a religious Jewish website and avoid inappropriate language at all cost.

If you promote any foreign religions, gods or messiahs, lies about Israel, anti-Semitism, or advocate violence (except against terrorists), your permission to comment may be revoked.

No Responses to “How to Avoid Being the Next Ponzi Scheme Victim”

Comments are closed.

SocialTwist Tell-a-Friend

Douglas Goldstein
Current Top Story
The Gaza Region
Live Updates: Hamas Rockets Explode in Southern Israel (15:52pm)
Latest Blogs Stories
UNHRC war crimes panel head William Schabas - Not a good Schabas

But the real culprit is William Schabas, who by comparison makes Richard Goldstone look like a saint

South Africa of Flag

“The Jewish board of deputies, who are complicit, will feel the wrath of the People of SA with the age old biblical teaching of an eye for an eye.”

Doug Goldstein

Discussion on recent changes to Social Security benefits and how it will effect you.

bibi release

I do not understand why Bibi or anyone else (Obama) would ever contemplate accepting any terms by an organization that states loud and clear their goal of Israel’s destruction.

It’s the 4th time in 5 years Maccabi Haifa has traveled to America to play against NBA competition.

The media dumped on the “Lehava” people as extremist – racist and should mind their own business.

What is the point of having our own state when it cooperates with those who are against us?

It was the “first family event I missed due to aliyah.”

Antisemitism, stupidity, fear, or exaggeration?

During Operation Protective Edge, IDF soldiers were faced with deadly risks in the Gaza Strip. Sixty four soldiers were killed and many more were wounded in combat. This is the story of one IDF commander who put his life in danger to rescue a soldier kidnapped by Hamas. Lt. Eitan, 23, joined the elite unit […]

I am a right wing religious Jewish settler and I HATE seeing pictures of kids in Gaza who are dying or suffering because of this war.

Doug speaks with World Chess Cahmpion Magnus Carlsen.

If they weren’t true they would be funny!

Professor Aumann: Instead of hitting the opponent… step back and allow the opponent to hit himself

A letter from a survivor who recounts the horrors of the 1929 pogrom in Hebron.

Do Keynesian theories about government spending still apply today?

More Articles from Doug Goldstein, CFP®
Doug Goldstein

Discussion on recent changes to Social Security benefits and how it will effect you.

Doug Goldstein

Doug speaks with World Chess Cahmpion Magnus Carlsen.

Do Keynesian theories about government spending still apply today?

How can you prevent emotional baggage from holding you back?

This week Doug speaks with David S. Rose, entrepreneur, former angel investor, and founder of Gust.

Doug’s interview with engineer and personal finance blogger Len Penzo.

The 7 Decisions that changed author Andy Andrews’ life and how they can guide you towards success.

If eligible, are their benefits to claiming Spanish citizenship?

    Latest Poll

    Do you think the FAA ban on US flights to Israel is political?






    View Results

    Loading ... Loading ...

Printed from: http://www.jewishpress.com/blogs/goldstein-on-gelt/how-to-avoid-being-the-next-ponzi-scheme-victim/2012/09/11/

Scan this QR code to visit this page online: