Mr Ponzi with Fraud Scheme Is Knocking: Investors Who May Open

Abstract

Investors’ confidence is often abused by individuals who take advantage of investors on the financial market through fraudulent investment schemes. This article analyses factors that expose investors to Ponzi schemes. This study adopts a logistic regression model to assess the chances of investors falling prey to fraudulent investment schemes. This relationship is hypothesized as a function of affinity and trust, risk appetite, investment knowledge, understanding of Ponzi scheme, awareness of failed investment company, and demographic factors. The article reveals that affinity and trust, investment knowledge, awareness of investment company failure, understanding of Ponzi and educational level significantly affect the chances of an investor being victim or a non-victim of a Ponzi scheme. Demographic factors exhibit the expected relationship although not significant. The investment market can in no way be free of Ponzi schemes. Regulators of financial markets would have to intensify education of investors on how to identify and avoid Ponzi schemes. By analysing investors’ Ponzi victimization factors, this article adds to our empirical understanding of the factors that tend to put investors at risk of falling prey to Ponzi schemes.

Who Is Next? A Study on Victims of Financial Fraud in Japan

“…Victims of financial fraud experience not only financial losses but also major depression and other non-financial consequences (Button et al, 2010;Financial Industry Regulatory Authority, 2015). Several studies have been conducted on several investment frauds, such as Ponzi schemes, pyramid investments, and hedge fund related fraud that have shaken the financial world in the last couple of decades (Davis and Wilson, 2011;Bollen and Pool, 2012;Amoah, 2018). Over the years, authorities have initiated preventive measures against these kinds of fraud, making it difficult for fraudsters to replicate their methods.…”

A Socio-Historical Perspective on Ponzi Schemes and Development in Nigeria: The Role of the Christian Church

“…Once new investors cease from investing, the scheme is bound to collapse. Amoah (2018) states that these schemes come in different shades of investment and business presentations. He avers that, Some (Ponzi schemes) come in the form of investment companies dealing in financial instrument such as stocks or bonds, investment in foreign currency trading, insurance products, microfinance and banking operations.…”

“…While some are in this act, others resolved to be involved in other acts that are not internet fraud but rather, in investment frauds known as Ponzi schemes. These individuals usually take advantage of the investors on the financial market through fraudulent investment schemes (Amoah, 2018). The fact is, with the collapse of such schemes, the schemers may not be sued as their schemes are often done underground, and because there are no legal frameworks to support those who had lost their investments (see Sadiraj & Schram, 2018).…”

Effect of Ponzi schemes on a country: the case of Ghana

“…Other African countries such as Lesotho, Swaziland, Kenya, Namibia, Nigeria and Seychelles have been similarly affected by the operations of Ponzi schemes (Carvajal et al, 2009). In Ghana, past Ponzi and Pyramid schemes that have occurred involved companies such as, Pyram, Resource 5, Unique Sheperd, Savanna Gold Ltd, US Tilapia, Jastar Motors, DG Capital and Care for Humanity, Safeway Investment Group (Amoah, 2018). The most recent involving DKM Diamond Microfinance Company limited, and Menzgold Company limited occurred in 2015 and 2018, respectively.…”