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Can Ponzi schemes target potential real estate investors?

For readers who may not understand what a Ponzi scheme or swindle is, this post will start with a brief explanation. Providing this explanation can help you and other Florida residents recognize any red flags that may indicate a possible securities fraud.

The scam begins when the perpetrator attracts initial investors. After securing the initial investments, the scheme operator then pursues other investors by making unreasonable promises. He or she will use this next wave of investments to pay off initial investors in order to make the scam look like a legitimate investment opportunity. Once the perpetrator can no longer attract new investors, the scam will collapse, but the damage will already be done.

The answer to your question is yes; a real estate investment "opportunity" is an effective hook upon which to build a Ponzi scheme. After all, investing in real estate is a common practice across America and can help those approaching retirement build a little nest egg. All Ponzi schemes share a few common traits. Just a few of these include:

  • A promise of high returns involving very little to no risk
  • The investment opportunity is not registered with the SEC (Securities and Exchange Commission)
  • Information and documentation concerning the investment is difficult to acquire

A good rule of thumb when considering any investment is to talk over the opportunity with an attorney experienced in real estate litigation and commercial property law. If you have already been scammed, your attorney can help you find a satisfactory legal remedy. This will protect you going forward while also alerting the SEC so that other people do not fall victim to the scam.

Source: Securities and Exchange Commission, "Ponzi Schemes," accessed Oct. 25, 2017

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