Many college kids enjoy a variety of extracurricular activities when they are not in class. Whether that includes playing sports, campus leadership efforts or social gatherings, students often find ways to enhance their collegiate experience.
However, one recent college graduate faces criminal charges due to allegations of running a Ponzi scheme while working on earning his degree. The man allegedly offered other students, recent graduates and family members of alumni the opportunity to invest in a purported hedge fund, claiming generated returns in excess of 50%. Meanwhile, the Securities and Exchange Commission (SEC) claims the fund did not exist.
The student reportedly scammed investors out of nearly $270,000. Recent reports suggest the young man used some of the investment money he received to pay for personal expenses, such as bar tabs, Uber rides and a trip to Las Vegas. He also allegedly directed funds from new investors straight to early investors who asked for a refund.
Three ways you can protect yourself and your investment
Before you consider investing, regulators commonly identify the same issues in Ponzi schemes. Some of the ways you can invest wisely include:
- Choose registered investments. There are state and federal laws used to regulate securities. While someone claiming to offer investment opportunities might seem legitimate, be sure to verify their legality.
- Expect transparency. Do not invest your money into an opportunity without first receiving all the necessary information about it. Someone offering a legitimate security should be able and willing to clearly explain what they are offering.
- Anticipate volatility. Investing requires risk; do not let your judgment become clouded by claims of generating consistent returns.
You can contact the California Department of Business Oversight if you have questions or concerns about securities investments or potential fraud. When it comes to your money, ask questions first rather than recover losses later.