G2-The intelligient source news on hype.

February 14, 2007 - 12:07pm | Author: kiwigal | Articles

High yield investments. The risks are monumental. Add the word "program," and the losses are monumental.
High-Yield Investment Program Fraud (HYIP)

High Yield Investment Program fraud, or HYIP, has been around for decades. The basic premise is that an investor has no risk to his/her principal, and can reap profits of anywhere from hundreds of percent to thousands within a year or less. This is usually promised on the basis of the money being held in an escrow, dual signatory, offshore trust, offshore bank “sub-account” or attorney’s trust account. Sometimes it is simply a matter of the scammer being put on the investor’s own account, creating an illusion of “safety” because the money remains in the investor’s own bank and account. It is from any of those types of accounts the victim’s money disappears without a trace, regardless of what the paperwork says. In some cases, the investor is required to provide a document that seems reasonable or easily obtainable, but which in reality cannot be obtained or doesn’t even exist. The scammer uses the failure of the victim to “perform” this requirement as a legal excuse to steal the investment, or claims he/she is now forced to follow anomalous protocols that are ultimately blamed for the funds disappearing. Upon being prosecuted, the scammers often claim they too were victimized by some unknown entity to whom they sent the money even though they characterized themselves as “principals” in the deal.

There are numerous variations on the basic HYIP methodology, and numerous explanations for the existence of such a “program.” There is almost always an alleged “trader” who has specialized access to secret markets of deeply discounted credit and fixed income instruments issued by “top 25 world banks,” and a “facilitator” who is “next to the trader” in level of access. There is usually an alleged “humanitarian project” associated with the so-called “program” to justify it, and virtually every “program” is said to be approved by the Federal Reserve, IMF, U.N. or other known entity. Most victims are lured in by brokers who move them up a daisy chain to the facilitator, who takes over and operates the scam with the alleged trader. Often corrupt attorneys are involved, which is a good thing because their insurance can be attacked as part of a recovery.

Like Nigerian 419 and other types of advance fee fraud, HYIP fraud relies on the lack of financial knowledge of its victims, and in many cases the victims’ lawyers, who may be good lawyers but not sophisticated in banking, securities or finance law. Many types of advance fee, Treasury instrument and securities fraud are perpetrated with the ultimate goal of investing in a HYIP, as brokers with no licenses, no financial education and no financial wherewithal lure victims into their delusions of high finance and epic wealth.

If you are solicited with any proposition which promises unusual profits with no risk, contact G2 for a rapid assessment of the situation and players involved.