What would you think, when you answered the phone, if you heard, “How would you like to make 21% of your money, guaranteed?”
You might be asking yourself, “Hmm, that sounds interesting, so what’s the catch?” Or, you might think, “Oh! Of course! How do I get in?” That’s what scammers do in banking – you want a way to get your money back that no one else is giving.
As a legal journalist, I had to listen to the voice instead of shutting down, because there is no doubt that many people were hearing the same song. So I replied, “Tell me what you’re offering and why it’s not a Ponzi scheme.”
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Let’s take a moment to remember Bernie Madoff
This potential scam is similar to a Ponzi scheme in that the high “guaranteed” returns are unrealistic. The largest Ponzi scheme in American history was run by Bernie Madoff, who took investors’ money, promising steady returns. Instead, he defrauded thousands of people out of an estimated $65 billion over nearly 17 years, paying off the first victims with the money of later victims until it collapsed in 2008. Many they lost all their life savings. There were people who killed themselves. Madoff died in prison in 2021.
Iggy gives her opinion
“Mr. Beaver, I’m sure you know the digital currency bitcoin well,” “Iggy” began, starting his voice. “I work for a digital asset manufacturing company based in Austin, Texas, where we mine bitcoins with powerful computers. We arrange for you to buy computers that we rent from you and use them mining crypto, paying a fixed monthly fee. After five years, we buy computers with what you paid. We make money by selling bitcoins generated by your computers.”
As he spoke, I thought, Wait, the price of bitcoin has never been stable, so how can they guarantee a stable 21% return? And why do they need to me to buy their computers? Why don’t they use them themselves, for free, to mine my bitcoins?
Marketing advantages: The pressure is on
I asked, and Iggy agreed to email me his company’s documents, which arrived in seconds. The product is as smooth as a newborn baby, explains the company’s philosophy and how the sales price works and shows photos of the contracts that customers sign (although the contracts shown are illegible).
It was clear to Iggy that I did not understand this new world of digital currency. The next day, one of his bosses called. For about half an hour, I listened to a vivid explanation of why the thing I couldn’t touch was the next biggest thing. “Look at online reviews. They are all very beautiful,” he boasted.
Size it was, but good reviews can be bought, as I discussed in my article Can You Trust Online Reviews? Apparently not much.
“You’re obviously old school, Mr. Beaver,” said Iggy’s boss. “I’ll bet that years ago if someone had told you about an investment in cellular or Wi-Fi, you would have had the same skepticism,” he said in a tone of voice. disparaging.
I replied, “Not at all. My concern here is whether your guaranteed promise is unreasonable for a currency known to be volatile. But thanks for your call. ”
A request from a reader and former customer
I thought that was the end of it, but the next day, a reader and former customer called our office to ask if I knew anything about the company. this one. They had both received similar sales calls and asked me if I would review the company’s contracts for them. The reader is a recovering pharmacist, but my first client suffered a brain injury and receives monthly checks from his insurance. He wondered if it would be a good idea to put in another annuity and invest.
So I called Iggy and asked for a sample of their contract to review. And that made for a good conversation Saturday Night Live skit.
The same manager called and explained that everything is “Docusigned” online, so there is no sample contract available.
“Oh, so you can’t run away from nothing?” I asked.
“No, we only deal with the contract after you become our customer and you are ready to invest.” But the kicker was something I hadn’t thought of: “And besides, we won’t have computers to sell until November.”
“Really? What does that have to do with sending me a sample contract?”
He did not answer.
So, is this a scam, or legit? I don’t know. But whenever someone wants me to invest, lease a building or create an ongoing financial relationship, I want to see their contract and have it reviewed by my financial advisor and CPA. If that request is denied, then my answer is no!
Here are some things you can do to avoid falling for a scam:
- Always ask questions
- Don’t feel pressured
- Consider whether what you are being offered makes sense or is true
- Ask for a sample copy of the contract to show your financial advisor or lawyer and follow their advice on whether or not it’s a good deal.
Dennis Beaver practices law in Bakersfield, Calif., and welcomes comments and questions from readers, which can be sent to (661) 323-7993, or e-mail at. Lagombeaver1@gmail.com. And be sure to visit dennisbeaver.com.
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This article was written by and reflects the opinions of our contributing consultant, not Kiplinger’s editorial staff. You can view advisor records and SEC or by FINRA.
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