What are the warning signs of a Ponzi scheme?

Ponzi schemes, also known as pyramid schemes, are investment frauds that involve promising investors a large rate of return with little to no risk. In West Virginia, it is illegal to participate in a Ponzi scheme. Warning signs of a Ponzi scheme include promises of guaranteed returns regardless of market performance with seemingly little effort. These schemes often target investors who are looking for quick, high return investments. Another sign of a Ponzi scheme is when the same person or entity is managing the investment, collecting the funds, and paying out the returns. Ponzi schemes often require investors to recruit additional investors to join. This kind of recruitment often includes promises of a commission for any new investors you find, or promises of a higher return for larger investments. Investors should also be wary of any investments that promise returns that seem too good to be true and specialize in “no risk” investments. Any investments that require investors to keep their funds in the scheme for extended periods of time should also be avoided. Finally, if the person running the scheme is unable or unwilling to provide you with documents that show how their investments are performing, this could be a sign of a Ponzi scheme. Additionally, be wary of any attempts to pressure you into making an investment. If something seems too good to be true, it probably is. It’s important for investors in West Virginia to be aware of the warning signs of Ponzi schemes and to always research any investments they are considering.

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