Ponzi scheme cost thousands for investors' friends

JACKSONVILLE, Fla. – He preyed on his friends and those who trusted him the most. In the end, his victims lost hundreds of thousands of dollars.

But there are ways to protect yourself from being victimized in a classic Ponzi scheme.

Jeffrey Shalhoub claimed he was a commodities trader. The truth? He was a con artist.

"Jeffrey Shalhoub knew what he was doing from day one," said U.S. Postal Inspector John McDermott. "He took investors' money and only traded a third of it."

Shalhoub promised investors big weekly returns -- 10 percent of their principal every week. But postal inspectors said he was running a Ponzi scheme.

"As the investment goes on, they usually get paid back not with their earnings but new investor money, and eventually the bottom falls out and there is no money to gain," said McDermott.

In all, almost $300,000 in losses.

"He was a fraud from the beginning," McDermott said. "He knew exactly what he was going to do. It was part of his master plan to use the money for his gain."

Instead of investments, the money went to cars, travel, golf memberships and expensive dinners. The worst part is who he was scamming.

"Shalhoub preyed on his friends and family," McDermott said. "He preyed on people who trusted him."

Postal inspectors said all potential investors should research businesses or people they trust with their money.

In this case, Shalhoub never held the required license to operate a commodities trading pool.

And there were other red flags.

"It's imperative to watch out for guaranteed high earnings," McDermott said. "When you invest in something, nothing is guaranteed."

Shalhoub was convicted and sentenced to three years in prison.