The president of an investment firm is behind bars after lying to investors and stealing nearly $8 million. Now US Postal Inspectors wants all consumers to know how to avoid getting caught up in a Ponzi scheme.
"He took the clients that he built up over 25 years and started selling fictitious loans and overselling loans," said US Postal Inspector Amy Kerkoff.
Postal Inspectors say dozens of investors were duped. The investment firm tricked them into believing they were funding development projects. The problem? The deals didn't exist.
Instead, the president of the firm used the money to pay off other investors, whose money had already been stolen. It's a typical Ponzi scheme.
“He had a fleet of cars for his business. He spent a month in Hawaii with 20 family and friends and footed the bill for that and he sponsored hydroplane races," said Kerkoff.
Postal Inspectors say some victims were left with nothing.
“Ultimately, they have lost everything --they’ve lost their life savings and retirement. Many of them are older and will have a hard time recovering those funds," said Kerkoff.
Inspectors point out that there were red flags, like important paperwork was never received.
“They get too comfortable and didn’t follow up. Do your homework and make sure you get everything linked to your investment,” warned Kerkoff.
Often one of the first signs of a Ponzi scheme is the promise of unusually high returns. And keep in mind that con artists can fake the paperwork. Research is key so check out the actual investment to make sure it's real.