California residents who are looking for ways to invest their money should always be wary of scams such as Ponzi schemes. According to the Securities and Exchange Commission, or SEC, there are many indications that an investment arrangement may be part of a Ponzi scheme.
An opportunity that is advertised as providing high returns with low risks deserves close scrutiny. The same applies for investments that guarantee very consistent returns. Investments that are linked to the stock market are usually characterized by varying returns.
An unregistered investment is another sign of a Ponzi scheme. Individuals should focus on investments that are registered with state regulators or the SEC. Registration provides investors with valuable information such as data about a company’s finances and services.
Sellers, individuals and companies that are not licensed are also red flags. Valid licensure is required by both state and federal laws.
Another sign of a Ponzi scheme is a complicated and secretive strategy. High returns from the investment may be attributed to mysterious strategy, or an investor may be provided a cryptic explanation about his or her returns.
Faulty or nonexistent paperwork is another hallmark of Ponzi schemes. This can include late or error-filled statements. Reputable companies tend to have efficient reporting systems that allow statements to be issued regularly.
Not receiving payments may be one of the glaring signs of a Ponzi scheme. Investors who are having difficulty withdrawing their money or not receiving their promised payments should be suspicious of the investment.
Individuals who are convicted of a white-collar crime risk long incarceration times and substantial fines. They may also be prohibited from taking part in certain financial transactions in the future, such as investing in the stock market. A criminal attorney may provide representation for those accused of fraud, money laundering and more.