Episode 47: The power of a ponzi scheme

The ASIC Podcast

In this episode we take you behind the scenes of a ponzi scheme, where unbelievably good returns are offered to investors, the scheme operator seems to be trustworthy – but it’s all smoke and mirrors.

ASIC investigators Kaan Finney and David McArthur explain how ponzi schemes work, how operators attract investors, how ASIC investigates and shuts down these schemes and most importantly, how can you can avoid getting caught up in a scheme.

A ponzi scheme is an investment scam where the promoter convinces people to invest in the scheme. Money is deposited by early investors and used to pay the first round of returns. However, new money invested is used to pay older returns to investors. People are led to believe there is an investment because of this when often there actually is no investment at all or the investment is not what they think it is.

There are practical tips on how to avoid ponzi schemes and other types of investment scams on ASIC’s MoneySmart website or you can subscribe to our media releases to find out about the latest matters we are investigating at ASIC.

And if you have feedback on this podcast, we’d love to hear your thoughts. Send us a tweet to @ASICmedia