Businessman swindled dozens out of life savings in Ponzi investment scam

Ponzi schemes are a form of investment fraud which rely on the fraudster using money from new investors in a non-existent scheme (such as Mr Greig’s RBS high-interest accounts) to pay existing investors.

As existing investors see returns, this strengthens the pretence that the investment is legitimate. Still, the scam relies entirely on convincing new investors to buy into the lie to keep it running. Some of Greig’s investors did receive payments, but these were funded by money deposited by other unsuspecting victims.

Before investing in any investment scheme, it is key to carry out your own due diligence and get as much information on the scheme as possible to help you make an informed decision.

Action Fraud, the National Fraud and Cyber Crime Reporting Centre, outlines a number of ways you can protect yourself against a potential Ponzi scheme:

1. ‘Guaranteed risk-free’ investments do not exist – high returns can only be achieved with high risk.
2. Be cautious of technical jargon – fraudsters use this to confuse and impress, but the language is usually vague and uninformative.
3. Fraudsters will often add an element of pressure to the decision, such as a time-limited offer, to force you to make a quick decision without giving you chance to think it through or investigate properly.
4. It is relatively easy for scammers to make themselves look and sound legitimate, with glossy websites, impressive job titles, and meetings in swanky venues. Make sure you do your own background research and confirm the scheme’s authenticity by investigating the company’s status, checking reviews and contact details.
5. Check the FCA register before registering to make sure the company you are considering actually exists or has any warnings against it.
6. Genuine companies will have no problem answering any questions you have about them, their staff, or the scheme. If your questions are being dodged or ignored, then this should be a red flag.
7. Finally – if it seems too good to be true, it probably is!

If you are convinced to transfer money to a fraudster, this is known as an authorised push payment (APP) scam. APP scams are a type of fraud in which criminals use tactics such as impersonation, interception, or building ‘relationships’ with victims to trick them into sending money for what they believe to be a legitimate purpose – such as an investment opportunity.

As the victim believes the reason for the payment to be genuine, they will often bypass banks’ security checks and authorise transactions that are, unfortunately, going straight into the scammers’ hands. Once the money has been transferred out of the victim’s accounts and into one controlled by the scammer it is usually moved straight on, sometimes overseas, and becomes difficult to trace or recover.

In the UK, banks have a responsibility to safeguard consumers from potential scams by putting in place procedures to halt or block scams as they happen, including:

• Regularly monitoring accounts and transactions for signs of fraud, scams, and money laundering.
• Implementing systems to identify, delay and/or block suspicious transactions that may indicate fraud.
• Following the City watchdog Financial Conduct Authority (FCA) guidance on how to protect consumers from fraud.

If your bank refuses to refund you and you believe that they could have done more to warn you, or halt or block the scam transactions, your complaint can be taken to the Financial Ombudsman Service (FOS) for an independent investigation. The FOS is a government-backed body responsible for resolving disputes between financial services providers and their customers.

Sarah Spruce, Head of the APP fraud team at TLW Solicitors commented on the £13m Ponzi scheme case:

“The promises given to the victims in this case – secure deposits with high returns – are typical of the claims given by many investment scammers. They have been sold the dream and unfortunately seen it turn into a nightmare.

We would encourage anyone considering investments of any type to familiarise themselves with the hallmarks of a scam and take their time to make any decisions – even consider getting independent expert advice before committing. However, if it is too late and money has been lost we can explore your options to make a refund claim.”