How to protect yourself from pyramid schemes - WRCBtv.com | Chattanooga News, Weather & Sports

How to protect yourself from pyramid schemes

Posted: Updated:

HAMILTON COUNTY, TN (WRCB) -- Amid allegations that families lost millions in a Ponzi Scheme in Soddy Daisy Channel 3 wanted to learn more about how people fall for such a scheme.

Former Federal Prosecutor Gary Humble helped convict Luis Rivas in 2009 after he scammed nearly $30 million from investors across several states in a Ponzi scheme. "He had everyone snowed, had a lot of people snowed. He had a good con going," Humble says.

The word Ponzi comes from Charles Ponzi, the man many consider the first to successfully pull off the scheme in the 1920's. Now, schemes like this are happening everywhere reportedly in small towns like Soddy Daisy.

"Of course the essence of a Ponzi Scheme is you need a continuous flow of investors, it's basically cash flow type of proposition," Humble explains. "It's really like seed money. You make payments to earlier investors so they think they're getting something, some kind of actual return on their investment, whatever it is. It's really no return on anything, it's just money coming from new suckers."

So how can you protect yourself? "As a rule of thumb, if it's too good to be true it probably is," Humble says.

He also says investors should look out for guaranteed returns and do your homework before you invest. "A lot of times it just comes down to trust, are you willing to trust this person," says Humble.

  • NewsMore>>

  • Graysville Rehires Indicted Police Chief

    Graysville Rehires Indicted Police Chief

    Friday, July 25 2014 10:35 PM EDT2014-07-26 02:35:07 GMT
    COUNTY - RheaCOUNTY - Rhea
    GRAYSVILLE, TN. --(WRCB)-- Jason Erik Redden was back on the job today as the Chief of Police of Graysville, Tennessee.Redden, who currently faces 10 counts of official misconduct including theft, has had a tumultuous reign within the last year as the city's top cop.He's been suspended, reinstated, fired, and now rehired.And while some city officials lack faith in Chief Redden, you may be surprised at the level of support he has within Graysville. " I am not surprised they done it, in any oth...More
    GRAYSVILLE, TN. --(WRCB)-- Jason Erik Redden was back on the job today as the Chief of Police of Graysville, Tennessee.Redden, who currently faces 10 counts of official misconduct including theft, has had a tumultuous reign within the last year as the city's top cop.He's been suspended, reinstated, fired, and now rehired.And while some city officials lack faith in Chief Redden, you may be surprised at the level of support he has within Graysville. " I am not surprised they done it, in any oth...More
  • UPDATE: Dog’s condition sparks outrage, owner cited for neglect

    UPDATE: Dog’s condition sparks outrage, owner cited for neglect

    Friday, July 25 2014 7:49 PM EDT2014-07-25 23:49:19 GMT
    A suspected case of animal neglect in Chattanooga has sparked outrage among hundreds of local animal lovers.More
    A suspected case of animal neglect in Chattanooga has sparked outrage among hundreds of local animal lovers.More
  • Mudslinging intensifies in 3rd District Republican race

    Mudslinging intensifies in 3rd District Republican race

    Friday, July 25 2014 7:48 PM EDT2014-07-25 23:48:27 GMT
    It is two weeks away from voters heading to the polls in Tennessee for the primary election and the 3rd Congressional District race is one to watch.More
    It is two weeks away from voters heading to the polls in Tennessee for the primary election and the 3rd Congressional District race is one to watch.More
Powered by WorldNow
Can't find what you're looking for?

WRCB-TV
900 Whitehall Road
Chattanooga, TN 37405
(423) 267-5412

WRCB Jobs EEO | FCC Public Files

Powered by WorldNow
All content © Copyright 2000 - 2014 WorldNow and WRCB. All Rights Reserved. For more information on this site, please read our Privacy Policy and Terms of Service.