EDMONTON, Alberta, Dec. 14 (UPI) -- Police in Canada have charged an Edmonton, Alberta, woman with cheating more than 60 people out of $10 million ($8.7 million U.S.) in an illegal Ponzi scheme.
Royal Canadian Mounted Police Cpl. Robert Moore told the Toronto Globe and Mail victims invested from $10,000 to $800,000 during a 19-month period with Cheryl-Lynne Braun, 42 -- but the suspect does not have an investment business or even a background in investing.
Ponzi schemes -- named after Carl Ponzi, who bilked thousands of investors in New England in the 1920s -- involve using money from new investors in a venture to pay off earlier investors. Profits are never created because there is no underlying investment and the schemes eventually collapse.
Moore said people are often lured into Ponzi schemes by the promise of getting rich quick, even when opportunities seem "too good to be true." Ponzi schemes often collapse when one or more investors get nervous and start pulling money out.
Fugi Saito, program director of the Heads Up Fraud Prevention Association -- an Edmonton-based fraud prevention and education organization -- said investors should be cautious with hard-sell tactics, and legitimate investment programs should be transparent and not secretive.
