A year after Bernard Madoff went to prison for masterminding the biggest-ever Ponzi scheme, lawyers and regulators say a growing number of these scams are preying on investors and their hunger for high yields.
Razor-thin interest rates are squeezing the flow of income to Americans putting savings into CDs, money-market accounts and bonds. Swindlers have responded with schemes that lure victims, often retirees and the elderly, with promises of high rates for seemingly safe vehicles.
Such scams, that use money from new victims to pay earlier rounds of investors, have been around for centuries, including the namesake one, perpetrated by Charles Ponzi, that collapsed in 1920.
The recent financial crisis helped end Madoff's decades-long phony investment business responsible for an estimated $18 billion in losses for thousands of victims.
But the combination of paltry rates and turbulent stock markets has helped create an audience more receptive to real estate investment trusts (REITs), promissory notes and other seemingly safe vehicles offering rich yields.
The Financial Industry Regulatory Authority, which regulates U.S. broker-dealers, says it has been catching more Ponzi schemes in the past year or so.
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