Beamer and Ponzi Scheme

People profit off these types of investments often. They promise (and deliver at first) very high yields. It starts falling apart when people start to liquidate their holdings. Say I invested $1000 in the company and was promised 20% returns. The set up of this scheme as I understand it is to use the new investment as the return. So if I ask for my $1200, they take the $200 I ‘made’ from someone else’s investment. The scheme falls apart when many start trying to liquidate their investment and since there never was any real company investment, that money doesn’t exist in the extent they promised. Putting in to the company as a simple investor isn’t illegal if the party has no knowledge of the workings of the way the investments are treated. So if Beamer was simply putting his money into a company based solely on the advice of a trusted friend (Donnan), then he did nothing wrong at all. You lay out names as if everything they do is illegal and immoral. When starting a company or setting up a mutual investment, initial partners often go to friends and colleagues for the start-up money. Being a friend to Jim Donnan and investing money in a company he says is legit is not illegal or unprecedented. All this story tells anyone at this point is that you should never believe anyone who PROMISES percent returns that are so far outside of what a typical good investment would return. If someone comes to you and guarantees 15%, close your wallet and walk away.