Daily Dose of Ponzi Schemes

[Chris Seveney]

Good morning all. I do like to share these as there are active and passive investors here on biggerpockets and these stories hopefully those may get some education on what to look for, or not to look for. While we never wish for anyone to take on any losses, some of these stories are mind blowing.

In today's edition we welcome Kumar Arun Neppalli who raised money from investors. What was his pitch.... Get this:

He worked for the town of Chapel Hill and convinced people he had insider knowledge of development plans for future real estate deals - and would ask for money and get them to sign a NDA. 

OK so some takeaways - 

1. If someone is raising funds and has you sign a NDA to not disclose, that is a red flag.

2. More importantly, insider information is really not legal, so how ethical do you think someone is that is like "hey I got a good tip on XYZ, lets invest and make $". That should already be a sign.

[Stuart Udis]

@Chris Seveney  This is exactly what's happening but they aren't out there looking for the sophisticated investors. They are intentionally targeting those who are not and using the internet and social media to do so. Reminds me of going out on my father-in-law's sailboat where an ***hole in a speedboat wrecklessly speeds by creating a wake. My father-in law would say all it takes is a checkbook to allow this wreckless behavior. Well, some of these syndicators are the ***holes who now have their checkbooks.