Canadian Ponzi Scheme Collapse - Jan 16/13

[SiRV]

First, for the newbies out there, educate yourself on what a Ponzi Scheme is:

https://www.khanacademy.org/science/.../ponzi-schemes

Second is a real life example posted below. Was going to post this in Off-topic but figured it'd be nice to have a story for the financially inclined

Financial experts are warning people to be careful where they put their investment dollars, after hundreds of people lost millions after an Edmonton investment fund collapsed.

Now, they're unlikely to get their money back because the businessman who was running the firm has committed suicide.

“If you knew the guy … you would never say he was crooked,” said investor John Fedoruk.

Fedoruk invested $170,000 with William Wong and the United Investment Group, which operates out of west Edmonton. In return, he saw 15 per cent returns every month — until last Wednesday, he received a letter from Wong.

"By the time you are reading this, I would have committed suicide," the letter read. In the letter, Wong explains that the investments began to lose money and he could not meet the returns that he promised.

He writes that he felt he couldn’t tell anyone, and kept sending out cheques to investors as long as he could before the fund collapsed in on itself. He asks for forgiveness.

“The statements and guarantees I gave you were nothing but numbers on papers now. I had used every dollar to pay, pay and pay until I lost everything, including my own life," his letter says.

Wong also left a note on the front door of his business, saying he would not be able to come in to work, saying he sent a letter to expect why.
Better Business Bureau spokesman Ron Mycholuk said with Wong’s death, it is unlikely that any of the investors will get any of their money back.

“The truth of it is, investment is risky,” he said.

“From what we understand from Alberta Securities, there's no paper trail. They couldn't find anything.”

Mycholuk said before someone agrees to invest with any company, they should research both the business and the president. He also recommends contacting the provincial licensing agency.

United Investment Group was not registered with the Alberta Securities Commission.

Some investors are still hopeful that some of the money can be recovered and are seeking out other who lost money when the fund collapsed.

source:
Millions lost as Edmonton investment fund collapses - Yahoo! Finance Canada

[SB7]

Sad story. Happens too often nowadays. Even smart people make bad decisions, especially with money.
Posted via RS Mobile

[shawnly1000]

Originally Posted by striker_boi7

Sad story. Happens too often nowadays. Even smart people make bad decisions, especially with money.
Posted via RS Mobile

Agreed; Vancouver is actually a hot spot for financial fraud (i.e. mining related pump/dumps, OTC/pink frauds, etc) just Google David Baines (Vancouver Sun columnist that writes about stock fraud)

[Hehe]

These people must be crazily stupid.

I feel sad for them falling for this, but what kind of investment can guarantee 15% monthly return?! That's over 400% annually.

Even the absolute best manager in the world can't have anywhere close to that number.

[Ulic Qel-Droma]

there are funds that make 400%+ a year.

but it's not consistent, nor guaranteed.


lol the ponzi scheme video sounds a lot like our banking system....