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Learn How to Avoid Falling Victim to a Ponzi Scheme

Falling victim to a Ponzi scheme can be devastating. Many investors have lost their entire life’s savings, including many who fell for Ponzi schemes in retirement. While it is possible to recover fraudulent investment losses from a Ponzi scheme in some cases, it is best to avoid these losses if possible.

With this in mind, here are five tips all investors can follow to help prevent themselves from falling victim to a Ponzi scheme:

1. Work with a Trustworthy Investment Advisor

As an individual investor, one of the best ways to protect yourself from Ponzi schemes (and other investment fraud scams) is to work with a trustworthy investment advisor. A reputable investment advisor at an established firm will utilize his or her firm’s resources to thoroughly research all investment opportunities and focus on recommending legitimate investments that are tailored to your specific investment objectives and risk tolerance. While some Ponzi schemes will appear to be legitimate investments, most will fall far outside of the typical types of investments that investment advisors recommend for their clients.

2. Read All Investment Materials Carefully

While you can rely on your investment advisor to help you make informed decisions, it is still important to read all investment materials carefully. Of course, this is especially true if you are investing on your own. The materials provided in connection with Ponzi schemes will often have several red flags for fraud, including issues such as:

  • Poor grammar, punctuation errors, misspellings and typos
  • Omission of key financial information
  • Inconsistencies between materials (or even within the same document)

3. Do Your Own Research

Along with carefully reviewing all investment materials you are provided, you should do your own research as well. Oftentimes, taking the following steps will allow investors to uncover concerns that help them avoid making a dangerous investment decision:

  • Researching the broker and brokerage firm on FINRA’s BrokerCheck
  • Using search engines and social media to search for third-party information (including complaints and lawsuits)
  • Looking up the company’s registration information with the U.S. Securities and Exchange Commission (SEC) and relevant state offices

4. Make Cautious Investment Decisions

If investment materials are poorly written, or if you cannot understand the nature of the investment, then it is best to stay away. Likewise, if your research gives you pause for any reason, you should consider a different investment opportunity. There are more than enough legitimate investment options out there, so you do not have to take a risk on something that shows possible signs of fraud.

5. Contact an Attorney Immediately if You Have Any Concerns  

Finally, if you have invested and you have any concerns that you may be a victim of a Ponzi scheme, you should contact an attorney immediately. When dealing with a Ponzi scheme, taking legal action promptly can be essential for maximizing your chances of a full financial recovery.

Concerns About a Ponzi Scheme? Discuss Your Investment with an Attorney at Zamansky LLC

If you are concerned that you may have invested in a Ponzi scheme, our attorneys are here to help. To schedule a free and confidential consultation with an attorney at Zamansky LLC as soon as possible, call 212-742-1414 or tell us how we can contact you online now. 

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