PipStop

A couple of months ago I was contacted out of the blue by someone who was looking to put $30,000 into an investment. They wanted to know what I thought about the opportunity.

As curious as I am, I agreed to meet this individual and had the opportunity, or should I say "scheme."

I listened to the details:

- an opportunity only for friends and family,

- a guaranteed annual return of 87.5%,

- a hefty commission fee being paid out to sales people, who sold without any sort of licensing,

- a shadowy About Us - Where are they located? Who is involved? That wasn't information for the general public to know,

- the website screams "stay away," and

- I could go on, but I won't for the sake of brevity.

I told this individual that this had the clear markings of a Ponzi scheme. Aggressive recruitment of fresh capital to pay off earlier investors. I wrote about Online Investments and Communities six weeks ago with this situation in mind. Gold-Quest International is the name of the company that was actively soliciting, and had been for the past couple of years it seems.

The British Columbia Securities Commission issued a cease trade order on Gold-Quest, and the Securities and Exchange Commission sent out a release on May 7 detailing their court order to stop Gold-Quest from defrauding anyone else. Gold-Quest was dubbed as a "fictitious currency trading program."

It's also starting to be reported by the mainstream news media as well.

The point here is to illustrate that despite there being obvious scams to some; others will always turn a blind eye when the return seems so lucrative - which should be the first red flag - when something sounds too good to be true.

Some other key points to consider when evaluating an "opportunity,"

• Unreasonable or guaranteed high rates of return with little or no risk.
• Secrecy or "insider tips," usually with an urgency to act quickly.
• Money moved offshore with references to tax avoidance.
• Phrases such as "profit like the experts" or "your friends can't be wrong."