Tag: Ponzi Scheme
A Ponzi scheme is a particular type of pyramid scheme — an investment scam in which investors are paid from capital brought in by new investors, rather than from profits earned.
The fraudulent scheme is named after Charles Ponzi, who in 1920 applied the technique which was previously presented in works of fiction, such as Charles Dickens’ 1844 novel Martin Chuzzlewit .
Here is how a Ponzi scheme works:
And here’s an archive of news stories regarding Ponzi schemes with a religious angle:
His next stop was to talk to the leaders at the Church of Latter Day Saints, where he was a respected bishop. He confessed that the company he started 14 years earlier, Market Street Investors, was a fraud.
Then he came home and told his wife.
Shawn Merriman had accumulated a $4 million fine-art collection, classic cars, expensive boats and a luxury mobile home. He had paid off the families’ million dollar house in Aurora. It had all been funded with money he stole from his clients.
Last September the admitted Ponzi-schemer was sentenced to 12 1/2 years in prison in an emotion-filled hearing that included an appeal from his mother, one of his victims, to “make him pay.”
Now divorced, Andrea — who was unaware of her husband’s fraudulent business — shares her story on her blog, The Unexpected Life.
Ponzi’s Scheme: The True Story of a Financial Legend
How Ponzi Schemes and Pyramid Frauds Work
In every Ponzi scheme, some investors profit early on. But courts can force them to return the money, even if they were unaware of the fraud.
Authorities say Reeves — founder and owner of now-defunct Alanar Inc. — and his three sons duped about 11,000 investors in the Ponzi scheme.
The State of Indiana alleges that the Reeves’ scheme was an affinity fraud in that Alanar’s marketing strategy was devised to appeal to the Christian faith of potential investors.
The Aug. 6 arrest was triggered by a story in The Arizona Republic that documented a trip Purvis took in April to Las Vegas to promote a gold-mine project to potential investors. At the time, Purvis was on probation after spending about a year in prison on charges related to impeding the fraud inquiry.
But state prosecutors said that is just the beginning of their case against Purvis. At an Aug. 24 hearing, they argued that he needed to remain locked up not only because there is a risk he will flee prosecution but because of the risk he poses to people still willing to give him money.
He is scheduled to stand trial June 14 in Superior Court on 43 counts of criminal fraud and theft charges related to his non-profit company Nakami Chi Group Ministries International, which authorities describe as a Ponzi scheme.
Authorities accuse the 40-year-old Chandler man of operating a multimillion Ponzi-scheme through Nakami Chi Group Ministries International.
Edward and Maureen Purvis, Gregg Wolfe and their Scottsdale-based company — Nakami Chi Group Ministries International — were ordered to pay $11 million in restitution Wednesday and an additional $250,000 in administrative penalties.
Beginning in 2000 in North Texas, the defendants devised a scheme to induce people to enter into investment contracts with IPIC.
They targeted churches, ministries and religious organizations and their pastors, leaders and members and represented to investors that IPIC was a highly successful import/export business.
None of the principals could be reached for comment Friday. Purvis has denied any wrongdoing.
Wolfe last year agreed to turn state’s evidence and admitted to investigators that he and Purvis for years funneled millions of dollars in investors’ money into offshore accounts as part of the scheme.