Investor fraud, such as a Ponzi scheme, is nothing more than a fraudulent investment operation that pays returns to separate investors from their own money or money paid by subsequent investors, rather than from any actual profit earned. The Ponzi scheme usually entices new investors by offering returns other investments cannot guarantee, in the form of short-term returns that are either abnormally high or unusually consistent. The returns that a Ponzi scheme advertises and pays requires an ever-increasing flow of money to keep the investor fraud tactic moving along.

This type of scheme is named after Charles Ponzi, who operated an extremely attractive (yet fraudulent) investment scheme in which he guaranteed investors a large and significant return on their investment in U.S. postal coupons. The scheme then dissolved when he was simply unable to pay investors who entered the scheme at a subsequent date.

Additionally, Bernie Madoff made front page news in that he defrauded thousands of investors over many years by engaging in investor fraud whereby his companies were nothing more than ponzi schemes that cost innocent victims billions of dollars. As a result of his actions, many people lost large sums of money, with some even losing their entire financial worth. Critics have lashed out heavily at Congress for not creating more enforcement of Registered Investment Advisors (RIA), which is what Bernie Madoff technically operated under. As a result of his arrest and convictions, the Securities and Exchange Commission (SEC) has mandated surprise audits on these RIA's in the hopes of creating more accountability and transparency for their actions. This type of investor fraud has, and can continue, to cause severe stress on the financial markets if not stopped.

Don't let your organization's employees or your company become victims of these investor fraud schemes. Order your Fraud Policy and Procedure Manual today and get educated on some of the most common investor fraud schemes being played out. The more educated and informed your organization and your employees are, the safer your financial assets will be. The Fraud Policy and Procedure Manual is a great tool for helping all employees understand, detect and ultimately, prevent investor fraud.

1. Common Fraud Schemes
2. Pyramid Schemes
3. Ponzi Schemes
4. Letter of Credit Fraud
5. Health Insurance Fraud
6. Credit Card Fraud
7. Occupational Fraud
8. Invoice and Billing Fraud
9. Identify Theft and Fraud
10. Telemarketing Fraud
11. Financial Correspondence Fraud (Nigeria)
12. Bid Rigging
13. Phishing
14. Cashier's Check Fraud
15. Debt Elimination Fraud
16. Work at Home Employment Schemes
17. Tax Fraud
18. Securities Fraud