High-yield investment program

 

 

 

 

 

 

 

 

 

 

This article is about a particular type of investment fraud. For legitimate high-yield

 

investments, see yield (finance) and high-yield debt.

 

A high-yield investment program (HYIP) is a type of Ponzi scheme, an investment scam

 

that promises unsustainably high return on investment by paying previous investors

 

with the money invested by new investors. Most of these scams work from anonymous

 

offshore bases which make them hard to track down.

 

Mechanics!

 

Operators generally set up a website offering an "investment program" which promises

 

very high returns, such as 1% per day (3778% APY when returns are compounded every

 

day), disclosing little or no detail about the underlying management, location, or other

 

aspects of how money is to be invested. The U.S. Securities and Exchange

 

Commission (SEC) has said that "these fraudulent schemes involve the purported

 

issuance, trading, or use of so-called 'prime' bank, 'prime' European bank or 'prime'

 

world bank financial instruments, or other 'high yield investment programs.' (HYIP's)

 

The fraud artists … seek to mislead investors by suggesting that well regarded and

 

financially sound institutions participate in these bogus programs."[1] In 2010,

 

the Financial Industry Regulatory Authority(FINRA) warned that "[t]he con artists

 

behind HYIPs are experts at using social media — including YouTube, Twitter and

 

Facebook — to lure investors and create the illusion of social consensus that these investments are legitimate."

 

Though Ponzi schemes have existed since at least the early 1900s, the rise of digital

 

payment systems has made it much easier for operators of such websites to accept

 

payments from people worldwide. Electronic money systems are generally accepted

 

by HYIP operators because they are more accessible to operators than traditional

 

merchant accounts. Some HYIP operators opened their own digital currency companies

 

that eventually folded; these companies include Standard Reserve, OSGold, INTGold,

 

EvoCash, and V-Money. StormPay started in the same way in 2002, but it remained in business even after the HYIP that it was created to serve was shut down by the State of Tennessee.

 

Some HYIPs have incorporated in countries with lax fraud laws to secure immunity from

 

investor laws in other countries. The operators have been known to host their website

 

with a web host that offers "anonymous hosting". They will use this website to accept

transactions from participants in the scheme.original research?

 

Some investors try to make money by attempting to invest in HYIPs at an early enough

 

stage to create a return, and then by cashing out before the scheme collapses to profit at

 

the expense of the later entrants. This is in itself a gamble as poor timing may result in a

 

total loss of all money invested. To reduce this risk some of these investors use "tracker

 

sites" listing the schemes and their current state. One expert states that there is not

 

enough evidence to corroborate that tracker sites can actually help investors make more money.

 

 

 

 

 

 

 

Examples:

Zeek Rewards!

 

On August 17, 2012, the U.S. Securities and Exchange Commission (SEC) filed a

 

complaint against defendants Paul Burks and Zeek Rewards, based in North Carolina.

 

Paul Burks ran Zeek Rewards, an investment opportunity that promised investors

 

returns by sharing in the profits of Zeekler, a penny auction website. Money invested in

 

Zeek Rewards earned returns of 1.5% per day. Investors were encouraged to let their

 

gains compound and to recruit new members into a "forced matrix" to increase their

 

returns. The SEC contends that this forced matrix payout scheme constitutes a pyramid

 

scheme. New investors had to pay a monthly subscription fee of between US$10/month

 

to $99/month and provide an initial investment of up to $10,000. The higher the initial

 

investment, the higher the returns appeared. The SEC stated that the Zeekler website

 

brought in only about 1% of the Zeek Rewards company's purported income and that the

 

vast majority of disbursed funds were paid from new investments. The SEC alleges that

 

 

Zeek Rewards is a $600 million Ponzi scheme affecting 1 million investors, which would

 

be one of the largest Ponzi schemes in history by number of affected investors. A court-

 

appointed receiver estimated that the $600 million amount could be "on the low end"

 

and that the number of investors could be as many as 2 million.[8][9] Paul Burks paid

 

$4 million to the SEC and agreed to cooperate with its investigation.

 

OSGold!

 

OSGold was founded as an e-gold imitator in 2001 by David Reed and folded in 2002.

 

According to a lawsuit filed in U.S. District Court in early 2005, the operators of OSGold

 

may have made off with USD $250 million.CNet reported that "at the height of its

 

popularity, the OSGold currency boasted more than 60,000 accounts created by people

 

drawn to promises of "high yield" investments that would provide guaranteed monthly

 

returns of 30 percent to 45 percent."

 

PIPS!

 

PIPS (People in Profit System or Pure Investors) was started by Bryan Marsden in early

 

2004 and spanned more than 20 countries.PIPS was investigated byBank Negara

 

Malaysia in 2005 which resulted in Marsden and his wife being charged in a Malaysian

 

court with 97 counts of money laundering more than 77 millionRM, equivalent to $20

million.

 

Colonyinvest!

 

Another large case took place in Thailand in 2008. Colonyinvest cheated 50,000 Thai

 

investors out of about 5 billion Baht (~ 150 million US$).

 

Other HYIPs!

 

Other HYIPs that have been shut down due to legal action include:

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• Studiotraffic

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• Geniusfunds inc. (Cyprus)

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• Ginsystem Inc. (Singapore)

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• Solidinvestment[19] (United States)

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• City Limouzine (India) Pvt Ltd started by Sayed Mohammed Masood and Chand Syed Masood. (India and United States) 

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• EMGOLDEX or Emirates Gold Exchage but UAE government disclaims the company is based in UAE.

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• WorldWide Solutionsz (South Africa) started by Marelize van Niekerk-Venter and Ruan van Niekerk-Venter And Much More