15 questions to ask before you wire

Tick every statement that applies to the investment you're considering. These are patterns that regulators associate with Ponzi schemes and investment fraud.

A red flag is a warning sign, not proof of fraud. And a clean result here doesn't mean an investment is safe. Print this page

The returns

Returns or your principal are described as "guaranteed," "protected" or "risk-free."Every investment carries risk. Guarantees are one of the most common fraud features.

You're promised a fixed, high return every month (for example, 1% or more per month).Real investments go up and down. 2% a month is about 24% a year.

The track record shows the same positive return every period, even in bad markets.Unusually smooth returns are a classic Ponzi sign.

You can't explain, in one sentence, how the investment actually makes the money it pays you."Proprietary algorithm," "AI trading," "liquidity pools" or "bank instruments" with no verifiable details.

The structure

You'd earn bonuses or commissions for bringing in friends or family.Schemes that depend on new money need constant recruitment.

You're asked to send money to a person, or to a company with a different name than the one offering the investment.Check that the payee matches the issuer named in the documents.

Withdrawals have conditions you didn't know about, or existing investors mention delays.New fees, lock-ups, "audits" or "system upgrades" that delay payments.

The contract says something different from the marketing.For example, the brochure says "guaranteed" but the contract says you may lose everything.

The people and the paperwork

The person selling it isn't registered to sell securities.Check them on FINRA BrokerCheck and the SEC adviser search. An insurance license is not a securities license.

They claim to be "SEC approved," "government backed" or "insured."The SEC doesn't approve investments, and FDIC insurance doesn't cover them.

The company is much newer than the track record it claims.Check the formation date in the state business registry.

Key operations or accounts are offshore, with no clear reason.Offshore structures make it harder to verify assets and recover money.

The sales approach

You were told not to discuss it with your bank or adviser, or what to tell the bank about the transfer.Discouraging outside advice is a strong warning sign.

There's pressure to decide quickly ("limited spots," "closes Friday").Legitimate opportunities can wait for you to check them.

It came through a seminar, social media, a messaging app, or someone you met online.Including events at churches, clubs or retirement workshops.