Investment scams and fake brokers – scams on the rise in 2021


Since diving into Bitcoin as a base for potential scams, I have found myself plunged into the quagmire of investment scams, which seem to be experiencing a resurgence thanks to online banking and investing.

We all need to make wise investments and as I return to this topic, the same principles of deception and protection still hold true – but are quickly ignored or forgotten in the bright lights of temptation and supposed opportunity.

Phantom promises: the case of Bernie Madoff

A few decades ago, investment guru Bernie Madoff attracted billions of dollars from investors with his remarkable ability to predict the market and generate huge profits for his clients.

Image: YouTube

On paper, his investment fund was growing at a rate that eclipsed his contemporaries and while a few people cashed in from time to time, most simply reinvested and continued to see their money grow, apparently according to Madoff’s claims.

In fact, these claims were almost entirely false, based on lies that had borne fruit for many years.

While people believed their money was safe somewhere, it was actually sent directly to Bernie’s personal accounts.

So while Madoff could pay what a few investors were supposed to earn; when too many investors had to pull out, his deception was quickly exposed and it became apparent that there was no real fund and that Bernie had just lied from the start.

It’s a pretty simplified version of what happened with Madoff but it’s enough to understand how his scam works.

Imagine taking a hundred dollars a year from a hundred people and telling them all that they made 10 percent on their investment.

Since this is a pretty good return, most would reinvest for another year, and you could sell a lot on a 10-year investment with slightly better returns.

If one or two withdrawals are made, you have to return a few hundred dollars, but you still have almost $ 10,000 of the first year’s investment.

After five years, you would have around $ 50,000 and probably a lot more, as many more people would be eager to sign up for your amazing fund.

The problem, of course, is that even though you have $ 50,000 in your account from all of these suckers, these suckers think you have more than that since each of them has apparently gained 10% each year; So if too many of these “investors” decide to cash in – just like Bernie – you’re almost certain to get caught.

But what if there was a way to keep people’s money and make them think they just weren’t lucky?

False brokers in 2021

When investing in stocks or legitimate stocks, it is important to diversify – to spread your money and to limit the risks of losing value on your investment.

One way to do this is to buy relatively strong stocks like Apple and Google or invest in FTSE or NASDAQ where there is a historical uptrend and maybe put some aside for some bets. crypto or more risky that could “touch” but could also “refuel” without expose yourself financially.

In other words, be reasonable.

But a spider arrives, dressed as a stockbroker and if you fall for his web of lies, you could open yourself up to an extremely simple scam that has become remarkably easy to perform.

It works like this:

A potential investor is told that he can make a significant profit by entrusting his money to a broker who works outside the normal system.

Through third parties, he has managed to increase his past investments by 20% or more over short periods of time and is about to start another round of investments.

So after hearing the story and having it checked out by other people – maybe friends or business associates you trust – you put in some cash and of course you make a nice little one. profit.

The question now is: are you cashing in or reinvesting and adding even more of your own money?

Since your goal is to make your money work for you, there is a good chance that you would add more and join the next round of investments and would probably tell other friends how well you did the first. times, thus increasing the number of potential victims.

The name of the game here is to create a wallet of suckers who all believe they are making money when everything is ONLY on paper, but unlike Bernie Madoff, who continued until the scam went off. collapsing under its own weight, smart crooks know when to fill the fund with a so-called “bad investment” that will cost investors half or more of their money.

At the end of an investment period, the scammer simply identifies a number of stocks that are falling apart or losing most of their value and then claiming that those investments are costing their clients a large amount of money. .

A pure con artist would then run with all his money while a smarter con artist would return half of it – maybe even more – and explain that this round of investment was simply an outlier and a victim of the ups and downs of the market. scholarship holder.

In reality

Needless to say, the bogus broker only needs to keep his victims’ money in an account and then refund a percentage after claiming to have lost the market balance and creating fake documents for this purpose.

More sophisticated crooks – perhaps licensed brokers like Madoff – could invest in real, blue-chip stocks to build up a seemingly legitimate fund, then manipulate records to make it look like they’ve lost a large sum on shares in reserve.

Another method is to use legitimate investments to pump and dump worthless stocks, but claim the price of the tanked stock. before
the crooked broker could sell, when in reality he or she manipulated the price from the start and kept the profits after selling at the highest price.

There are many checks and balances to supposedly end these practices in “legitimate” businesses, but dishonest traders are not as rare as many would like to believe and the industry will often rush to cover up any wrongdoing by. sweeping away a lot of bad behavior on their own responsibility. carpet.

Selling lies on social media

The type of rank scam I’m describing here is quite simplistic but made more possible by the internet and the many ways to buy stocks and stocks.

The kind of crooks who seem to mimic Madoff’s methods have evolved those methods to avoid the inevitable and aren’t necessarily real brokers but made-up characters who convince people that they have an angle or method that seems to work. according to entirely fabricated evidence. !

Other scammers turn out to be unlicensed brokers operating through unregulated investment firms which appear legitimate but operate outside the financial conduct authority (in UK).

These characters use Instagram, WhatsApp, and social media to lure the unwary with images of obvious wealth or advertising stunts, but in the end, savings are lost and although the trail leads to unregulated investments, the reality of these investments is something that I would be extremely doubtful about.

It’s worth considering how well someone can investigate the money trail when it goes outside of authorized and supervised methods, but in some cases a few simple documents can turn the marks off.

For the layman, a PDF file or a web page with imaginary results can do wonders for the uninitiated and if a scammer has the time and patience to cultivate a large number of small investors with the means to invest more, he just needs to keep their money or just invest it while inflating the supposed returns until there is enough reinvestment and additional investment to pull a bogus tank on the fund and keep the money that would have been lost.

By choosing the right brands and playing them right, many suckers will simply continue to invest in the belief that the tank was just “one of those things” and hope for better results in the future.

Played correctly, hardly anyone will properly review increasingly complex investment cases and unless they are brought to a professional person, they may never realize the truth.

Even if someone sounds the alarm and detects the deception, many of these “brokers” on Instagram are complete fabrications or hide behind multiple identities and can quickly disappear with every penny they’ve invested!

In other words – they are a figment of their own imagination, selling a lie to people who certainly should know better but are vulnerable to their own lack of knowledge.

Main picture: Shutterstock


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