Funds Recovery - Scam Recovery Company

The general public is roughly aware of these types of schemes. Primarily, it is common knowledge that they are a sure way for people to get duped out of their money. Nevertheless, Pyramid and Ponzi schemes prevail and millions of people worldwide get sucked into them. These types of fraud have a similar way of functioning and they may occur wherever people are searching for a great investment opportunity. 

The Ponzi Scheme 

This type of fraud is constantly reemerging and even experienced financiers may fall victim to it. Its main driving force is the alluring promise of high return with low-risk investment. The fraudulent founders go to great lengths to present themself as legitimate operations. They attract people by promoting their unique business venture all the while sustaining the illusion that they are generating profit. 

They manage to pull this off with the hierarchical structure of funds flow. Essentially, the top needs to have a constant influx of new investors. The perpetrators use the newly acquired cash infusions to cover the profits of the older financiers. To ensure a constant money flow, scammers use portions of funds to pay marketing and promotional costs. Such organizations are smoke and mirrors as they don’t make any cash and rely on the money of new members to sustain the old ones.

Since the whole thing would collapse if people could easily withdraw their money, the special trick is to manipulate their members into leaving their funds. Scammers present that the investments are constantly making profits, but they hesitate to pay them off. In some cases, the frauds do refund money sparingly, but usually, there is a technical difficulty when people request their money. Commonly, they try to avoid this altogether by presenting convoluted strategies for why the victims’ funds should remain intact.       


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    Famous Cases of Ponzi Schemes

    The Ponzi scam got its name from Charles Ponzi who embezzled money from his investors as early as the 1920s. It would be optimistic to claim Mr. Ponzi was the inventor of this hoax, as there is proof that a similar form of money extortion had been much older. This implies that scammers have been pulling off this scheme for over a century. Regrettably, even with all the history and media coverage people still join such frauds. 

    It’s important to note that Ponzi operations can get massive leaving huge numbers of people cheated out of their money. The biggest case of this type of scheme is referred to as the Madoff Ponzi scheme, named after the central figure Bernie Madoff. He had been running his operation for over 17 years during the 1990s and late 2000s. The financial injury owed to his victims accumulates up to billions of dollars. To this day people are trying to recover their funds. 

    Another infamous example would be the workings of the MMM Ponzi scheme company whose founder was Sergei Mavrodi. The scam was operating on the state level in Russia throughout the 1990s. Approximately, 10 million people lost their money to it. However, Mavrodi didn’t stop there, he created MMM Global. He used it to target countries worldwide during the 2010s. Regardless of MMM’s history, and even openly statements that it was a pyramid scheme, people still fell victim to it.    

    The Pyramid Scheme

    This type of fraud functions similarly to a Ponzi scam in the sense that it operates with a hierarchical structure. It also needs a constant inflow of funds from newer members to make a profit for the older ones. Additionally, both scams by design extort money from a large number of people. However, there are several differences to set them apart. 

    While a Ponzi scheme does rely on the steady growth of investments, once a new member has provided their funds, they aren’t required to do anything more. On the other hand, pyramid scams would demand their fresh affiliates to go on and recruit other people into the scheme. Almost always, there is a condition that an individual can realize profit only if they draft a specific number of newcomers.  

    This setup entices investors to aggressively headhunt new ones. The problem lies that the organization isn’t selling any goods or services, but rather an opportunity to get rich through recruitment. This model isn’t sustainable, as the need for recruiters grows exponentially and it quickly collapses. In the end, the scammers disappear with large amounts of cash, leaving the victims without their funds.      

    MLM or a Pyramid Scheme?

    This abbreviation stands for Multi-Level Marketing which is a legal though controversial form of practicing business. This enterprise is frowned upon, mainly because it is highly similar to a pyramid scheme. Unlike the scam, MLM businesses actually sell goods, but through a pyramidal chain. The new members are hired to push products, but more importantly, they are encouraged to enlist people to take on the position of sellers. New recruits become the channel of distribution and the older ones receive a bonus percentage for enlisting new members. 

    Things get more problematic as the Pyramid scheme operators will often present themselves as legitimate MLM businesses. In order to confuse their targets the scammers may offer sales of products and services nominally. Many pyramid schemes pose as MLM to trick people into joining them. 

    What to Do in Case of a Pyramid Scheme or a Ponzi Scam? 

    As these types of frauds affect a considerable portion of the population, many governments take action declaring them illegal. Nevertheless, scammers now use the vast reach of the internet to target investors through emails, social networks, and apps. Even with all the legal actions and warnings, people still lose their funds to pyramid and Ponzi schemes every day. 

    If you suspect that you or your loved ones have been a victim of these sorts of scams, it is important to understand that you have options. We at Funds Recovery provide specialized services that help people mitigate their financial damage. Our team will evaluate your case and make a plan of action to recover your funds as quickly as possible. 

    Take matters into your hands and make a first step to returning your hard-earned money. Contact us for a free consultation now.