Pyramids and fake startups: how not to become a victim

Investment fraud takes many forms, from classic pyramids to sophisticated schemes with fake startups. Fraudsters exploit the desire for quick profits and lack of investment knowledge to deceive trusting investors. In this article, we will explore the main types of investment fraud and ways to protect against them.

What is investment fraud?

Investment fraud is any scheme aimed at obtaining money from investors through deception, misleading, or providing false information. Fraudsters promise high returns but either do not return the funds at all or use new investors' money to pay old ones.

Main types of investment fraud

Financial pyramids (Ponzi schemes)

Financial pyramids are a classic scheme of fraud, named after Charles Ponzi, who popularized it in the 1920s. The principle of operation is simple:

• Scammers promise high profitability (often 20-50% per month)
• The first investors indeed receive payouts
• Funds for payments are taken from new investors
• When the influx of new money stops, the pyramid collapses

Modern pyramids are often disguised as legitimate investment projects, MLM businesses, or cryptocurrency schemes.

Fake startups and ICOs

With the advancement of technology, scammers have started creating fake startups and ICOs (Initial Coin Offerings). They may include:

• Fake whitepapers with technical details
• Fake developer commands
• Non-existent partnerships with well-known companies
• Fake demo versions of products
• Fake reviews and recommendations

3. Fraudulent investment funds

Scammers create fake investment funds that:

• They provide fake licenses and certificates
• Showing fake trading results
• They use aggressive marketing tactics
• Large minimum investments required
• Complex withdrawal schemes are being created

Real estate fraud

In the real estate sector, scammers can:

• Selling non-existent items
• Offering investments in fake projects
• Using fake property documents
• Creating fake schemes of shared ownership

How to recognize investment fraud?

Too good promises

If an investment promises a return significantly higher than the market rate (for example, 100% per annum), this is a serious red flag. Remember: the higher the promised return, the higher the risk.

Pressure for quick decisions

Scammers often create an artificial sense of urgency, claiming that you could miss out on a 'unique opportunity.' Legitimate investments do not require immediate decisions.

Lack of transparency

Suspicious signs:

• Refusal to provide detailed information about the project
• Unclear work schemes
• Lack of contact information
• Reluctance to answer questions

Aggressive marketing

Scammers often use:

• Spam emails and cold calls
• Social networks for mass engagement
• Fake reviews and recommendations
• Manipulative sales techniques

Lack of regulation

Check if the investment company has:

• License from the regulatory body
• Registration in official registries
• Audit reports
• Liability insurance

Ways to protect against investment fraud

Conduct a thorough check

Before investing:

1. Check the registration of the company in official registries
2. Study the financial statements and audit reports
3. Check licenses and certificates
4. Check out reviews on independent forums
5. Consult with a financial advisor

Diversify investments

Do not invest all your money in one project. Distribute funds among different assets and companies to minimize risks.

Only invest what you can afford to lose

Never invest money that is needed for essential expenses. Investments always involve the risk of losing funds.

Be cautious with 'exclusive' offers

If you are offered an 'exclusive opportunity' available only to a select few, it could be a sign of fraud. Legitimate investments are typically available to everyone interested.

What to do if you have become a victim?

Immediate actions

If you realize that you have become a victim of investment fraud:

1. Cease all further investments
2. Keep all documents and correspondence
3. Take screenshots of websites and advertisements
4. Contact law enforcement authorities
5. Contact our lawyers

Documentation

Gather all information about fraud:

• Contracts and agreements
• Payment documents
• Correspondence with scammers
• Advertising materials
• Website screenshots

Is a refund possible?

Refunding funds after investment fraud is possible, but requires a professional approach. Our team of lawyers specializes in:

Legal analysis of the scheme

We analyze the structure of the fraudulent scheme and determine:

• Legal grounds for refund
• Responsibilities of different participants
• Possibilities of recovery through court
• International protection mechanisms

Working with law enforcement agencies

We cooperate with the police and the prosecutor's office for:

• Criminal proceedings
• Seizure of assets of fraudsters
• Refund through confiscation

Civil lawsuits

If necessary, we file civil lawsuits for:

• Invalidation of transactions
• Damages recovery
• Compensation for moral damages

Prevention is the best defense

Remember the basic principles of safe investing:

• If an offer sounds too good to be true, it's a scam
• Never invest under pressure
• Always verify information from independent sources
• Consult with professionals
• Trust, but verify

Conclusion

Investment fraud poses a serious threat to anyone looking to grow their savings. Understanding fraudulent methods and following security measures will help protect your assets. If you do become a victim, do not despair - our team is ready to help.