Scribd Logo
Upload

Welcome to Scribd!

  • 34 views

    Ponzi Schemes: Presented by

    Uploaded by

    Ashar Anwar
    The document summarizes Ponzi schemes, including how they work, famous examples in Pakistan, and how they ultimately collapse. It provides details on Charles Ponzi and how his scheme in the 1920s led to the naming of these frauds. A notorious Pakistani Ponzi scheme "Double Shah" is described in depth, how it grew to over $1 billion but collapsed in 2007, leading to the arrest and imprisonment of its operator. Red flags of Ponzi schemes and tips to avoid being scammed are also outlined.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd

    Ponzi Schemes: Presented by

    Uploaded by

    Ashar Anwar
    34 views14 pages
    The document summarizes Ponzi schemes, including how they work, famous examples in Pakistan, and how they ultimately collapse. It provides details on Charles Ponzi and how his scheme in the 1920s led to the naming of these frauds. A notorious Pakistani Ponzi scheme "Double Shah" is described in depth, how it grew to over $1 billion but collapsed in 2007, leading to the arrest and imprisonment of its operator. Red flags of Ponzi schemes and tips to avoid being scammed are also outlined.

    Original Title

    PONZI SCHEMES

    Copyright

    © © All Rights Reserved

    Available Formats

    PPTX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The document summarizes Ponzi schemes, including how they work, famous examples in Pakistan, and how they ultimately collapse. It provides details on Charles Ponzi and how his scheme in the 1920s led to the naming of these frauds. A notorious Pakistani Ponzi scheme "Double Shah" is described in depth, how it grew to over $1 billion but collapsed in 2007, leading to the arrest and imprisonment of its operator. Red flags of Ponzi schemes and tips to avoid being scammed are also outlined.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    34 views14 pages

    Ponzi Schemes: Presented by

    Uploaded by

    Ashar Anwar
    The document summarizes Ponzi schemes, including how they work, famous examples in Pakistan, and how they ultimately collapse. It provides details on Charles Ponzi and how his scheme in the 1920s led to the naming of these frauds. A notorious Pakistani Ponzi scheme "Double Shah" is described in depth, how it grew to over $1 billion but collapsed in 2007, leading to the arrest and imprisonment of its operator. Red flags of Ponzi schemes and tips to avoid being scammed are also outlined.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    You are on page 1of 14

    PONZI SCHEMES

    AN INVESTMENT CASE STUDY

    PRESENTED BY:
    Ashar Anwar FA18-BAF-047
    Saboor Ali FA18-BAF-055
    M. Saqlain FA18-BAF-030
    Usman Qureshi FA18-BAF-006
    Abdul Qadir FA18-BAF-026
    WHAT IS PONZI SCHEME?

    A Ponzi scheme is a fraudulent investment operation that involves paying


    abnormally high returns (“profits”) to investors out of the money paid in
    by subsequent investors, rather than from net revenues generated by any
    real business.
    HOW DID PONZI SCHEMES GET THEIR NAME?
    • Charles Ponzi, was an Italian businessman. The scheme is named
    after Charles Ponzi, who became notorious for using the technique.
    • Charles Ponzi promised clients a 50% profit within 45 days, or 100%
    profit within 90 days, by buying discounted postal reply coupons in
    other countries and redeeming them at face value in the United
    States as a form of arbitrage.
    • In reality, Ponzi was paying early investors using the investments of
    later investors.
    FAMOUS PONZI SCHEMES IN PAKISTAN!

    • DOUBLE SHAH
    • TRANSMIT NETWORK TECHNOLOGY - TNT (PVT.)
    • B4U
    • CORPORATE AUTOMOBILES (PVT.)
    THE BIGGEST INVESTMENT SCAM
    “OF PAKISTAN ”
    • On Friday April 13, 2007 a person named Sibt-e-Hassan Shah, aka “
    Double Shah,” was arrested by government officials in Wazirabad, a
    small town of Pakistan.
    • He hasn’t even got any MBA or CA from LUMS or IBA.
    • A science teacher in a local school. Shah had college degrees and was a
    science teacher at Government High School, Nizamabad until 2005. 
    • He is suspected to have gathered very large investments in a very short
    time period.
    • He was arrested on the charge of robbery.
    THE FAMOUS SCHEME!

    • He quit his job & started his scam from his neighborhood, and his colleagues, asking
    them to give him their savings by promising to give 100% return on investment.
    • Sibt-e-Hassan claimed to double investors' money within 30 days in the beginning of
    his scheme, later extended to 90 days.
    • People were mortgaging their homes and investing their life savings. Most did not take
    their profits, but reinvested.
    • He accumulated around 1 billion US dollars (e.g. 156,075,000,000 in PKR).
    THE SCHEME GROWS!
    • Numerous people invested, and were paid stipend interest payments on their
    investment as promised.
    • The word spread, and investment came in at an ever-increasing rate.
    • He had built a vast network of offices and sub-offices in many cities, towns and
    villages.
    • Residents of Gujranwala, Gujrat, Wazirabad, Sialkot and Hafizabad were the cities
    where most of his clients were.
    • Cash was coming in at a torrential rate, but no one was asking for an accounting or
    looking at the books.
    THE COLLAPSE!

    • Double Shah's Ponzi Scheme was at its peak when it was exposed by 
    The Nation (Pakistan), a Lahore daily newspaper in an investigative piece published
    on the front page on April 6, 2007.
    • The issue came in the limelight at national and international level.
    • Double Shah was arrested by the Gakkhar town police on 13 April 2007 from his
    Nizamabad house on charges of Rs. 30,000 robbery.
    “DOUBLE SHAH” GOES TO JAIL!
    • 'Double Shah' was convicted by Accountability Court of Lahore on July 1,
    2012.
    • He was sentenced to 14 years Rigorous Imprisonment and fine equivalent to
    total liability against him (Pakistani Rupees 5.4 billion). All of his moveable
    and immovable assets were also confiscated.
    • NAB Lahore distributed Rs193.59 million among Double Shah scam
    affectees.

    • 'Double Shah' died in Pakistan on 30 October 2015.


    WHY DO PONZI SCHEME COLLAPSE?

    • With little or no legitimate earnings, the schemes require a consistent flow of money
    from new investors to continue. Ponzi schemes tend to collapse when it becomes
    difficult to recruit new investors or when a large number of investors ask to cash out.
    • As long as money kept flowing in, existing investors could be paid with the new
    money, but colossal liabilities accumulate.
    • The SEC investigates and prosecutes many Ponzi scheme cases each year both to
    prevent new victims from being harmed and to maximize the recovery of assets to
    investors.
    WHAT ARE SOME PONZI SCHEME
    “RED FLAGS”

    • High investment return with little or no risk


    • Consistent returns
    • Unregistered investments
    • Unlicensed sellers
    • Difficulty receiving payments.
    HOW TO ABSTAIN FROM PONZI SCHEMES?

    Whether you’re a first-time investor or have been investing for many years, there are some basic
    questions you should always ask before you commit your hard-earned money to an investment.
     Is the seller licensed?
     Is the investment registered?
     How do the risks compare with the potential rewards?
     Confirm business through commercial inquiry data.
     Visit the corporate entity if possible & Be suspicious and ask detailed questions.
     Where can I turn for help?
    CONCLUSION AND ENDING!

    “Investing should be more like watching paint dry or watching grass grow. If you want
    excitement, take $800 and go to Las Vegas.”
    - Paul Samuelson

     If you think investing is gambling, you’re doing it wrong. The work involved requires
    planning and patience. However, the gains you see over time are exciting.
     ‘Rizk-e-Halal’ always prove beneficial. The earners of quick money should think that a
    man goes to his final destination empty handed.
    THANK YOU!

    You might also like