web analytics
March 2, 2015 / 11 Adar , 5775
At a Glance
Blogs
Sponsored Post


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.

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 and investment services firm located in Jerusalem. He specializes in working with clients who live outside of the United States and want to maintain a U.S. brokerage account. Doug’s newest book, co-authored with Susan Polgar, about how using chess strategies to improve your finances, Rich As A King can be purchased at www.richasaking.com. He is a licensed financial professional both in the U.S. and Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, FSI. 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. 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.

Current Top Story
Americans have a more favorable view of Netanyahu than they do of Obama.
Americans’ Favorable View of Netanyahu at Record High, Says Gallup Poll
Latest Blogs Stories
Doug Goldstein

What are the ramifications of giving up your US citizenship? Would it effect your visiting the US?

brit mila at French jewish community

Chasidim believe that Metzitza B’Peh (MbP) is an essential part of the circumcision ritual.

Herzog & Livni

AMERICAN INTERFERENCE in ISRAELI ELECTIONS is IMMORAL and 1000% CHUTZPADIK!

Baruch Marzel (left) and Hanin Zoabi

Extremism from Jews is considered a “danger;” Arab extremism and anti-Jewish terror is “legitimate”

It was in fact Israel, not Palestinians or journalists, who began spreading the older photos, in order to generate credibility for the “slander” angle.

Next week we celebrate Purim, more relevant and illuminating in light of current events than ever

“They all attack each other” is how David described campaign tactics. “Welcome to politics, my son,”

Most Israelis think kowtowing to US demands to get on Obama’s “good side” won’t work and isn’t right

Big questions this week: Does materialism make people happy? Can one be happy with what they have?

A Rosh Yeshiva guessed 60% of bochurim in Israel’s yeshiva system belong there only 3-4 yrs post HS

Wednesday evening 25th of February there’s just the event for Anglos to attend, The Anglo Vote!

3 men pin the terrorist. In the white shirt is Jerusalem’s Mayor Barkat, taking a hands-on approach

The necessity for setting financial goals and how to realize your life’s dreams.

Not long ago Israelis waited nightly during campaigns for TV broadcasts of election campaign movies

I heard men singing…I saw men dancing. Can you imagine? It’s literally FREEZING out there! WOW!

Lapid is not anti-Haredi; He’s pro-Haredi in his way, wanting them to flourish. and join society

More Articles from Doug Goldstein, CFP®
Doug Goldstein

What are the ramifications of giving up your US citizenship? Would it effect your visiting the US?

Doug Goldstein

Big questions this week: Does materialism make people happy? Can one be happy with what they have?

The necessity for setting financial goals and how to realize your life’s dreams.

Discussing the connection between speech and thought and how a foreign language affects decisions?

Can a business trying to find solutions to world problems be profitable?

In our second podcast this week, Doug meets James Clear, entrepreneur and expert on personal habits. How easy is it to change your behavior to achieve your goals? And how can you improve your financial habits if they are deeply ingrained? Listen to your favorite personal finance show for the answers to these questions and […]

Does wealthy always equal healthy, and how do personal relationships affect your financial success?

Find out about the relationship between money and life and why you need to budget and save

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: