How to spot a ponzi scheme

An early example of a ponzi scheme in Singapore was the Gemini Chit Fund that was promoted 40 years ago. Here is a brief story about this it. A more recent example is the Sunshine Empire.

In a ponzi scheme, the promoter promised you an attractive return. The early investors received that return. They were excited and put in more money. They encouraged their friends to join in the investment. The promoter was able to use the money received later to pay off the attractive return to the earlier investors. As long as more money came in, compared to the payouts, the promoter was able to continue to operate the sheme. During this time, the promoter was also able to siphon off the surplus into their pockets. When the ponzi scheme collapsed, all the remaining investors lost all of their money.

In terms of size, nothing beats the ponzi scheme operated by Bernie Madoff in USA, as described in this story.

There are many ponzi schemes now being operated in Singapore today. The mode of operation is the same. The story could be the fantastic growth of land plots, wine, industrical chemicals or other products. Heard them?