Yet another lesson learned in the Manna fraud scheme
It is always important to examine fraud schemes to find out just how they successfully entice so many investors into a loosing proposition. Here’s another significant aspect of the Manna ponzi scheme that is worth knowing about.
We always tell people in our InvestRight seminars that any promise of high returns with low or no risk is a false promise. There is no such thing.
Lesson #3 In this case, Manna convinced investors to loan it money by promising significant monthly returns. Manna told them that their funds would be placed with experienced traders who had a long history of producing double-digit monthly returns through foreign currency trading. Manna said it had an “annualized trading history of profit returns not less than 20% per month (240% a year).” Because of these high returns, Manna would pay consistently high returns back to its investors, as high as 125.5% per year.
The promise was 7% monthly returns, later reduced to 5%!
At the Manna hearing, the BC Securities Commission asked Dr. Peter Klein, an expert in international banking and trading, to give an opinion about the promised returns. His testimony reviewed the principles of financial theory and empirical studies. Dr. Klein concluded that it was simply impossible to generate returns of 5%, month after month, through any legal trading or investing in any financial markets.
So here’s the thing. All ponzi schemes offer high returns. That’s how they extract money from investors. Obviously, people who fall for these schemes don’t do their homework to see if the size of returns being offered is actually possible. And here’s another piece of information for you: returns are never consistent month after month. That was one of the red flags in the Bernie Madoff case. The markets fluctuate, up and down.
So watch out for excessively high returns promised consistently month over month. If that’s the promise, then mark my words, it is a scam.