Many new timeshare scams seem to be invented or recreated each year, it is really hard to go even a week most of time without hearing about a new variation or completely different scam invented to separate timeshare owners from their money. Recently I read a story out of Oregon on one of the local TV stations websites exposing a new instance of one of the oldest scams on record, the Ponzi scheme. KTVZ, an Oregon television station, reports that this latest timeshare scam was a nation wide operation and brought in an estimated 428 million dollars in revenue before the system came tumbling down. In Oregon it is estimated that nearly 5 million dollars was taken from residents before the scam was discovered. The type of scam that was used in this case is known as a Ponzi scheme, which originated around 1920 and is named after its inventor Charles Ponzi. This type of scheme has recently been in the news because it was used by Bernard Madoff in the largest investment fraud on Wall Street to date. If you would like more information about the Oregon timeshare scam or have been affected by it you can read the entire article here, “Time-share scam salesman: ‘We were victims, too’”.

How Does A Ponzi Scheme Work?
While we do not claim to be any expert on this matter or anything in the legal field we have developed an understanding of this type of scheme and would like to share the information. A Ponzi scheme starts off with a sales pitch most of the time an investment opportunity, in the above case the clients were advised to invest in Mexico timeshares which would yield high returns while being rented out through a number of different affiliates and partnerships. In reality the “Investment” opportunity normally generates little or no income revenue. In order to keep any suspicions at rest the creators of this scheme use money from new investors to pay older investors making them believe that their investment is really paying off and was a good transaction for their future. Eventually the money will run out and the scam collapses under its own weight, at this time everyone involved realizes they have been scammed and will never see their money again. Perhaps the most interesting part of the story reported by KTVZ is the salesmen who were selling the investment opportunities did not have any clue that they were even involved in the scam, they were hired to sell the investments and were paid via commissions on their sale, which were held by the creators of this scheme making the salesmen victims, in their minds, as well as the investors. Ponzi schemes can be carefully planned out and generate an extraordinary amount of income for the original creator, in fact Bernie Madoff’s variation of this scheme generated 65 billion in revenue before it collapsed.

Ponzi schemes are very hard to spot, the best advice we can give is to ask a lot of questions and research any investment opportunities you are contacted about to the fullest extent. Always remember if it sounds to good to be true chances it probably is. If you were contacted in reference to this scam or any other scam we would love to hear your story and if you have taken any steps to rectify the situation.

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