Part 1:
There are various types of investors in the market. Some investors are banks, personal
investors, corporate investors, peer-to-peer lenders, angel investors and the list goes
on.
Part 2:
A pyramid scheme is a business model that recruits members via a promise of
payments or services for enrolling others into the scheme, rather than supplying
investments or sale of products. I personally have never been part of a pyramid
scheme. I have witnessed pyramid schemes through friends on social media. That is a
perfect source to recruit new investors and trick them into the scheme itself. Pyramid
schemes can be extremely sketchy especially if you have a friend you trust that is also
tricked into it. The fact that it gains members through a promise of payments and or
services for enrolling others into the scheme, is just one main reason why it’s easy to
fall for. Being told your income is based mainly on the number of people you recruit, and
the money those new recruits pay to join the company makes most people think they
can make money easily. Knowing enough people and advertising whatever it is the
scheme promises and not on the sales of products to consumers is a lazy way that
makes people think they can make a lot of easy money fast. Tip-offs to this kind of
fraud include selling as a passive income or an easy money opportunity, high upfront
fees, or even a promise of unrealistic returns in a short amount of time. Pyramid
schemes are unsustainable because they rely on the ability to recruit more investors
and the only people really making money are the ones at the top of the pyramid. The
products themselves do not sell well and finding more recruits is the only way I see they
can make profit. The victims end up being all the “investors” or participants.
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Part 3:
According to the website, 2009 60 Minutes CBS broadcast on the Madoff affair, Harry
Markopolos was the man who discovered the Madoff fraud. He found out because he was a
competitor for Madoff from 2000-2004. He noticed Madoff’s performance line caught his
attention because it only went up. Madoff’s victims included charitable organizations,
Hollywood royalty, country clubs, and so many more victims.