Advisory: Illegal Investment Schemes
“The Bermuda Police Service is aware that either ‘Ponzi’ or pyramid schemes may be in operation or being promoted in Bermuda,” said a police spokesperson.
“The Bermuda Police Service is working with its community partners, the Bermuda Monetary Authority and Consumer Affairs to investigate the matter and educate the public on this criminal threat.”
“A Pyramid scheme is a non-sustainable business model that involves promising participants payment or services, primarily for enrolling other people into the scheme, rather than supplying any real investment or sale of products or services to the public.
“A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from any actual profit earned by the individual or organisation running the operation.
“Both Pyramid and Ponzi schemes usually entice new investors by offering higher returns than other investments, in the form of short-term returns that are either abnormally high or unusually consistent. Perpetuation of the high returns requires an ever-increasing flow of money from new investors to keep the scheme going.
“Ultimately both systems are destined to collapse because the earnings, if any, are less than the payments to investors. Pyramid schemes are specifically mentioned in the Consumer Protection Act as being a criminal offence.
“Those promoting such schemes are reminded that the promise or forecast or even concealment of material facts which induces others to invest or deposit is a criminal offence and is punishable for a maximum of seven years imprisonment.”
Acting Superintendent Sean Field-Lament advises the public that in the current economic climate, promises of “get rich quick” investment opportunities should be regarded with great suspicion and to take heed of the old adage “if it is too good to be true than it probably is.”
Minister Furbert, please take note.