Which action indicates possible Penza scheme activity?

The correct answer is B. An unlicensed investment advisor offers profits other investments cannot guarantee. A Penza scheme, also known as a Ponzi scheme, is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors. The scheme relies on attracting new investors with unrealistic promises of high returns and low risk, while using…

Risks and Methods of Money Laundering and Terrorist Financing

Question

Options

AA licensed seller offers higher profit on investments in a high risk country
BAn unlicensed investment advisor offers profits other investments cannot guarantee
CA licensed investment advisor lures aging/retired professionals to invest in securities
DA unlicensed investment advisor offers returns that are competitive with industry benchmarks

How the community answered

(23 responses)

A
4% (1)
B
74% (17)
C
13% (3)
D
9% (2)

Explanation

A Penza scheme, also known as a Ponzi scheme, is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors. The scheme relies on attracting new investors with unrealistic promises of high returns and low risk, while using their money to pay off the previous investors. An unlicensed investment advisor who offers profits other investments cannot guarantee is likely to be involved in a Penza scheme, as this is a common way to entice unsuspecting victims.

Topics

#Ponzi scheme#investment fraud#unlicensed advisors#predicate offense

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