Anti-investment law with low risk and high return
As we all know, the iron law of investment is that risk is proportional to return, and Ponzi scheme is often counterproductive. Liars often attract investors who don't know the truth with higher returns, but never emphasize the risk factors of investment. The rate of return in various situations may be different, and some are ridiculously high. For example, Ponzi promised to get a 50% return on investment within 45 days, and the rest were stable and extraordinary returns. For example, Madoff assured customers that the annual return was only about 10%, but he stressed that "investment must be earned and there will be no loss". But in any case, swindlers always try to design an investment path far higher than the average market return, and never reveal or emphasize the risk factors of investment.
Characteristics of capital flow in robbing Peter to pay Paul.
Because the promised return on investment cannot be realized at all, the return on investment for old customers can only be realized by joining new customers or other financing arrangements. This puts high demands on the capital flow of Ponzi scheme. Therefore, scammers always try their best to expand the scope of customers and broaden the scale of absorbing funds in order to get enough funds to make up for the space. Most scammers never refuse to add new funds, because the cake is bigger, not only the income is more considerable, but also the risk of capital chain breakage is greatly reduced, and the duration of the scam can be greatly extended.
The unknowability and unrepeatability of investment know-how
Liars try their best to play up the mystery of investment, keep the investment know-how secret, and try their best to shape their image as "genius" or "expert". In fact, due to the lack of real investment and production support, scammers have no "way to make money" for careful scrutiny, so keeping the mystery of investment as much as possible and publicizing the non-replicability of investment is one of their effective tricks to avoid external doubts. At that time, a reporter from Boston Global Times wrote an article to expose Ponzi scheme, but Ponzi refuted it on the grounds that he didn't understand financial investment.
Counter-cyclical characteristics of investment
The investment projects of Ponzi scheme never seem to be affected by the investment cycle. Whether it is industrial investment related to production or financial investment related to market conditions, investment projects always seem to make a steady profit. It seems that the afforestation plan of 10,000 mu has never been affected by climate, environment and geography. In the past 20 years, Madoff's hedge funds on Wall Street have survived several financial crises. These investment projects always show the anti-law characteristics of violating the investment cycle.
Pyramid characteristics of investor structure
In order to pay the high returns of the first investors, Ponzi scheme must develop continuously, attracting more and more investors through inducement, persuasion, affection and connections, thus forming a "pyramid" investor structure. A few insiders at the top of the tower make profits by squeezing a large number of participants at the bottom and inside the tower. Even Madoff, the former chairman of Nasdaq's board of directors, inevitably wooed the downline and made extensive use of friends, family and business partners to develop the downline. Some people successfully attracted foreign investment to get commissions, went offline to develop new offline and snowballed into a pyramid structure.