Financial Pyramids – How Not To Be Deceived in Business

Certainly, each of us has seen the offers of various companies that virtually nothing promises us great profits. You only have to pay a larger or smaller amount, buy some product, etc. In addition, we can make profits when we persuade other people to also invest their funds into the company. At first glance, everything in such offers is beautiful and colorful, but at the end it turns out that not only did we not make the promised money, but we lost what we have invested. And all because the company promising fantastic earnings turned out to be a financial pyramid.

What is a financial pyramid
What is a financial pyramid? The simplest way to say is that it is a specific financial structure, in which the participant’s profits depend on the contributions of people who entered the structure later. The first financial pyramid will be created by Charles Ponzi (hence the pyramids of Ponzi are often referred to as pyramids). And how do these pyramids work? Its creator always promises above-average profits at the beginning. We just need to invest a certain amount of money and wait for profits. Usually, the organizer of such a structure, persuades people who have already paid cash to look for other potential participants, and in return, promises them a commission. And so the whole structure “spills over the world”. It should be said that these types of financial pyramids are doomed to failure. For the profits paid to people who are the first to join the structure, they depend on the contributions of new participants. When they run out of money, problems start with the payment of profits and even previously paid funds, because they have already been embezzled. In the end, impatient people who have paid the money and can not get them back are starting to report the matter to the law enforcement agencies and the whole pyramid collapses.

How to recognize a financial pyramid

How to recognize a financial pyramid

The financial pyramid can be identified in several ways. First of all, participants are promised extraordinary profits. In addition, by browsing the offer of a given company, we can guess that profits depend on introducing more people to the structure. When we notice something like that, we should immediately “light up the warning light” in our head and we should go as far as possible from such offers. Thanks to this, we will not lose money, which we have often saved for many years.

The most famous financial pyramids

The most famous financial pyramids

The best-known financial pyramid in the world is the structure organized by Barnadra Madoff. He attracted wealthy investors to his structures, who, as the investigation showed, paid about 65 billion dollars to her. When the matter came to light, it turned out that over 5,000 people invested in the pyramid.

A large financial pyramid also worked in Russia, and its creator was Sergei Mawrodi. When it collapsed, it turned out that the money to her paid about 5 million Russians, and the total payment was for 150 million dollars.

We also had to deal with financial pyramids in Poland. The first of them was the so-called Safe Savings Bank, whose creator Lech Grobelny promised extremely high interest rates on deposits. StanisÅ‚aw Kotarba, founded Galicyjski Capital and Investment Trust. We can not forget about the last affair, Amber Gold. The company promised high interest rates on their “deposits”, but when they ceased to influence new funds into the structure, it soon became insolvent.


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