Ponzi Schemes and the Financial Sector: DMG and DRFE in Colombia

Hofstetter, Marc; Mejía, Daniel; Rosas, José Nicolás; Urrutia, Miguel

doi:10.2139/ssrn.2974111

Cited by 5 publications

(6 citation statements)

References 9 publications

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“…As in several other modus operandi, such as in Colombia's DRE and DMFG Ponzi schemes (Hofstetter et al, 2018), this study found that Ponzi crime fraudsters typically do not work solo. Instead, they commonly form a group of individuals with a mastermind behind the scam.…”

Section: Modus Operandi Of Ponzi Schemessupporting

confidence: 64%

Ponzi Schemes and its Prevention: Insights from Malaysia

Kasim¹

2020

MAR

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"A Ponzi scheme is a fraudulent investing scheme which promises high rates of return with little risk to investors. The scheme has led to a substantial amount of financial leakages in recent years. Despite warnings by the law enforcement agencies and regulators, many have unfortunately fallen victim. Hence, the current measures are limited in preventing the fraudulent schemes. Therefore, the present study aimed to identify the influencing factors for joining Ponzi schemes by examining the modus operandi used, profile of victims and fraudsters and to investigate the current measures in preventing Ponzi schemes in Malaysia. This study employed a qualitative methodology with semi-structured interviews and document reviews to collect data. Interviews involving eight interviewees with regulators, enforcers, and victims revealed that prevention of Ponzi schemes should be addressed holistically by examining the modus operandi used, profile of victims and fraudsters. Findings further indicated that the prevention measures are led by three core elements consisting of education, regulations and enforcement. Additionally, education is the best approach to ensure an effective preventive strategy which needs to be supported by a specific regulations on Ponzi schemes. This study provides recent evidence on Ponzi schemes and valuable insights for future development of preventive measures. Keywords: Ponzi scheme, pseudo-investment, fraud, prevention measures, regulation, enforcement"

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Section: Modus Operandi Of Ponzi Schemessupporting

confidence: 64%

Ponzi Schemes and its Prevention: Insights from Malaysia

Kasim¹

2020

MAR

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“…In the occurrence of the failure of this scheme, the funds were lost and that could lead to loss of capital formation which may hamper economic growth in the country. Hofstetter et al (2017) found that the operation of ponzi schemes reduced municipal savings deposits by 2.9% and certificate of deposit by about 10% in Colombia as participant in Ponzi schemes withdraw their deposit to invest in Ponzi schemes. According to Simon (2017), prior to system collapse, Nigerians lost N18 billion to MMM in 2016 through about three million participants in the scheme.…”

Section: The Consequences Of Ponzi Schemes' Failure In Nigeriamentioning

confidence: 99%

“…Furthermore, the collapse of ponzi schemes may have increased bad debt for banks in Nigeria. Hofstetter et al (2017) observed that operation of Ponzi schemes has the tendency of increasing loan and non-performing loans created by the formal financial sector. Using DMG and DRFE schemes in Colombia, they found that people who invested in Ponzi schemes have 39% more loans with formal financial system than those who did not.…”

Section: The Consequences Of Ponzi Schemes' Failure In Nigeriamentioning

confidence: 99%

Factors Influencing Ponzi Scheme Participation in Nigeria

Obamuyi

Iriobe

Afolabi

et al. 2018

ASSRJ

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This study examined the factors influencing Ponzi scheme participation in Nigeria. A multi-stage sampling procedure was used to select 384 participants for the study. Descriptive statistic and One-Way ANOVA was employed to analyze the data. The result of the analysis revealed that friends' recommendation, expected benefits, current economic situations, ease of obtaining funds and the get rich quick syndrome were the most influencing factors on Ponzi scheme participation and these factors were significant with the gender, age, marital status, employment status and educational level at 5% level of significance. The study concluded that ponzi scheme participation was mostly influenced by friend's recommendation, expected benefit, current economic

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“…There is such a difference between the two main jurisdictions of this study: while Hungarian legal terminology operates with a single umbrella term 'piramisjáték'metaphrased: 'pyramid game'in the (US) the designation of the very same notion ramifies to the tandem of 'pyramid-' versus 'Ponzi schemes.' Clarifications are needed, third, also because certain presumptions are often 4 Hofstetter, Majía and Rosas (2018) 18-33. 5 Jarvis (2000). See also Gorezi and Bashari (2009) 52-57. 6 Khuzami and Walsh (2009).…”

Section: Comparative Terminological and Definitional Notesmentioning

confidence: 99%

Pyramid and Ponzi schemes and the repercussions of the differing regulatory approaches

Tajti

2022

HJLS

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Apart from a few shorter papers inspired by the nomination of a new crime prohibiting the organization of ‘pyramid games’ by the Hungarian Criminal Code in 1996, the topic of ‘pyramid and Ponzi schemes’ remained of little interest to Hungarian legal scholars. Internationally, the topic has garnered increased attention due to the grave socio-economic effects of ever newer scheme-collapses, from the high-profile American Madoff (2009) to the myriad less-known cases from emerging systems like the fiasco of the Albanian pyramid schemes in the mid-1990s, pyramid schemes camouflaged as multi-level marketing (MLM) ventures, or their online versions more recently. Comparative works that would juxtapose the pertaining laws and experiences of the United States with those of Hungary are lacking. To fill the void, this article contrasts a select number of differing regulatory approaches. At one end of the spectrum is the United States (US), which, instead of passing sector-specific laws, mobilized and adapted the enforcement tools of all utilizable branches of law to combat the schemes. While in the US this has been uniquely primed by securities laws, in Hungary the task remains limited to what criminal law and the criminal justice system could offer, coupled with the dominantly ad hoc reactions of the Hungarian Securities and Exchange Commission (SEC). Development of tests to distinguish legitimate Multi-Level Marketing (MLM) companies from pyramid schemes disguised as such represents the only segment where significant rapprochement occurred between the US, the European Union (EU) and therefore also Hungary. For contrast and illustration of the other end of the spectrum, the systems that were forced to react to risks corollary to the schemes by enacting sector-specific laws, the most recent regulatory reactions of India, Myanmar, and Sri Lanka had to be resorted to. As the latter two imposed complete bans on all MLMs, it is only the Indian 2019 comprehensive act that attempts to combat the schemes and akin forms of financial fraud relying on a new comprehensive regulatory model. The Philippines is an interesting mixture made of local and transplants that readily proves that the solutions of the most developed US system could successfully be transplanted into a significantly different socio-economic environment.

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Ponzi Schemes and the Financial Sector: DMG and DRFE in Colombia

Cited by 5 publications

References 9 publications

Ponzi Schemes and its Prevention: Insights from Malaysia

Ponzi Schemes and its Prevention: Insights from Malaysia

Factors Influencing Ponzi Scheme Participation in Nigeria

Pyramid and Ponzi schemes and the repercussions of the differing regulatory approaches

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