Examples include an inheritance you were unaware of, a lottery win, or proceeds from shares you own. You’ll be told you need to make a payment before the money can be released.
The payment is usually a lot smaller than the amount you’re supposedly owed, but can still be a substantial amount.
They use the trust that exists within these groups to help steal money.
The U.S. Securities and Exchange Commission provides detailed information about avoiding affinity fraud.
Members of the boiler room will convince you to make a small initial payment and once they have your money, they’ll introduce many different reasons why you need to make a larger payment.
To make the scam more convincing, you’ll receive calls from ‘senior’ employees like the Vice President or CEO. This gives you the impression you’re a valued client. In reality, it’s other members of the boiler room.
These fraudsters appear professional. By the time you realise it’s a scam, they will have moved on and won’t answer your calls.
The schemes collapse when they stop receiving money from new investors.
We’ve investigated a number of Ponzi schemes in recent years. The largest known scheme in New Zealand to-date was Ross Asset Management. More than 1,200 investors were affected by this scheme and the overall loss was in excess of $115 million.
David Ross, who admitted running the scheme, was sentenced to 10 years and 10 months of imprisonment in November 2013.
This market does not exist and money sent to these schemes is lost.
You’ll also typically be promised high returns. These promises are often too good to be true and the only people making money are the sales people.
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