Ethics Paper – Ponzi Scheme
Developing good work ethics is essential in maintaining a quality of life within your
career of choice. Leaders establish policies conducted throughout most organizations to improve
work ethics through training and other resources allowing for businesses to oversee the ethics in
their staff. Even with tight-knit operations, a negative work ethic occurrence can reveal itself and
severely hurt all individuals and associated companies (“Ponzi Scheme”). A highly recognized
investment fraud concept within the financial industry is called the Ponzi Scheme. Every year
cases are investigated and prosecuted to prevent new victims and maximum recuperation of
assets (“Investor Alert: Ponzi Schemes Using Virtual Currencies”, 2013).
The Ponzi scheme is a system where, typically unlicensed, sellers pay off their existing
investors with the investments from new investors. It’s named from con artist Charles Ponzi, who
deceived his investors with a postage stamp speculation scheme of 50% returns on investments
within 90 days in the early 1900s (Yang, 2014). Throughout the variety of Ponzi schemes
occurring over time, many share common characteristics and warning signs. One evident and
suspicious factor is to look out for “guaranteed” investment opportunities. All investments carry
risk and it is most common for a higher return to yield a higher risk. Fluctuation is always part of
investing. If your finances are excessively orderly, it should trigger your doubt on where your
money is being utilized. It is recommended to avoid sophisticated strategies you cannot
understand should be avoided along, especially if you begin to recognize account statement
errors or have difficulty receiving payment or cashing out. Unregistered investments and
unlicensed sellers are typically involved. Without proper registration and licensing, federal laws
can be broken and affect your ability to access management, products, services, and finances of
where your investments intend to go. It is mandatory all investments are registered with the
Securities and Exchange Commission or state regulators and investment professionals to be
licensed or registered. With all these commonalities, understanding the red flags will save you in
the long run from being a victim of investment fraud (“Ponzi Scheme”). The “investment”
pursuit arises through a shared affinity between two individuals. Trust is gained through this
affinity, which can be a religious, national, or ethnic affiliation, allowing fraudsters to exploit
members of a group through respected leads or prominent members (“Investor Alert: Ponzi
Schemes Using Virtual Currencies”, 2013). Ponzi schemes eventually collapse when recruiting
new investors becomes too difficult, or the current investors decide they want to cash out
simultaneously, considering there are no legitimate earnings (“Fast Answers”, 2013).
The biggest Ponzi scheme in history dealing with approximately sixty-five billion dollars
was the chairman of NASDAQ stock exchange, Bernie Madoff. He was sentenced to a symbolic
