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Police warning on pyramid scheme

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Scheme promotion (Image supplied)
Scheme promotion (Image supplied)

Residents were warned by police to be wary of a growing number of scams designed to look like investment opportunities.

A Bermuda Police Service spokesman said the public should be "alert to individuals who may attempt to fraudulently obtain money from you, via what may appear to be legitimate means“.

He explained: “The latest such scheme encourages individuals to invest in a bitcoin plan with promises of returns of as much as $130,000 after 60 days.

“This is actually yet another example of a pyramid scheme.

“Pyramid schemes usually entice new investors by offering higher returns than other investment vehicles, usually in the form of short-term returns that are either abnormally high or unusually consistent.”

The spokesman said that to see the high returns continue, the schemes need “an ever-increasing flow of money from new investors” to keep going.

He added: “The advertisement for one of the bitcoin investment plans now being circulated clearly states ’success is based on the number of participants’.

“These schemes are destined to collapse because the earnings, if any, are less than the payments to investors.

“Pyramid schemes are specifically mentioned in the Consumer Protection Act as being a criminal offence.

“Those promoting such schemes are reminded that the promise or forecast or even concealment of material facts which induces others to invest or deposit is a criminal offence and is punishable for a maximum of seven years’ imprisonment.”

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Published November 04, 2020 at 5:29 pm (Updated November 04, 2020 at 5:29 pm)

Police warning on pyramid scheme

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