Ponzi pyramids and their consequences

The Madoff investment scandal was a major case of stock and securities fraud discovered in late 2008. Since then, Ponzi pyramids have caused an approximate $60 billion in losses only in the United States. Still in the US, more than 800 of these financial scams resulted in 8,000 years in prison for their instigators. The United States is of course not the only country affected by pyramids. In fact, the North-American country is actually less impacted than many others for the simple fact that regulation is more developed in the US than in most other countries. A Ponzi scheme is a fraudulent investing scam promising high rates of return with little risk to investors. The Ponzi scheme generates returns for early investors by acquiring new investors. The common point to all pyramids is that they promised unrealistic returns on all assets without the need to take risks. If an adviser finds you an investment with a known return above let's say 5% be careful. It does not mean that it is not possible to find such investments, but in order to obtain more than 5% any investor will need to take risks and the exact return will not be known in advance.