Sunday, May 20th, 2012

HYIP – Is it all Scam?

132

The high yield investment plan or program (HYIP) has been around for quite a while and many normally savvy investors have been taken in by promises of quick money. The unfortunate truth is that most if not all of these programs are scams or outright frauds. The few that actually do manage to work and maintain themselves for years inevitably fall as well. The name Bernie Madoff comes to mind whenever someone speaks of this type of scam. The truth is that almost if not all HYIPs are scams and fraudulent. They are the worst type of pyramid scheme.

The unfortunate truth is that people are suckered into promises of ten to thirty percent a day, week, month, etc increase in any invested amount. Investments that guarantee this type of return are universally fraudulent because the only way they could do this on a large scale and continue the program would be to actively counterfeit money. One particular case of a HYIP online scam comes from an imitation of the e-gold business. OSgold was started in the year 2001 and closed down in 2002. During that time they were estimated to have stolen or otherwise defrauded over two hundred fifty million US dollars through at least sixty-thousand user accounts. E-gold itself is considered a criminal site and company for illegal trafficking and laundering of money without license among other things. The basis for it was the immediate buying, trading, and selling of gold online between members. OSgold operated a HYIP version of this that did not survive for a year but ended up costing a great deal of money and leaving a lot of members in the financial lurch.

The most successful of these ponzi (pyramid) schemes is the one cited in the Bernie Madoff case. Everyone thought they were investing in legitimate stocks, and other holdings, but all they were doing is giving Madoff their money and he was in turn giving it to other people when they asked for their supposed profits from investments. If the economical tidal wave that crashed down on the world economy had not occurred no one would ever have known the truth.

The only type of HYIP program that could possibly work is one where the head of that program specifically guarantees an amount and they are required to sign a contract stating they will pay said amount no matter what. This in fact is not an investment program anymore when this occurs. This would change the situation into a short term loan with high interest. There is no investment, there is only a money lender and someone repaying the loan.

A typical HYIP ponzi scheme will, contrary to its fraudulent nature, serve to earn some investors a great amount of money in the early stages. If an individual can get in on the pyramid early enough they can in fact make a substantial profit. However, most people only find out about a lucrative investment plan such as this when it has already reached the financial melting point. That last tier of people to join will end up losing all their money and the only thing they have to show for it is life experience and moths in their wallets.

The only people to truly ever actively make money on HYIP investments are the original creators of the program. Everyone else that invests would be taking as great a chance with it as if they were to go to a local casino or play poker with their friends. It is nothing but a gamble and there is no true investment in it at all.

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