As of December 2020, the number of netizens in my country reached 989 million, and the Internet penetration rate reached 70.4%. The vigorous development of the Internet not only brings convenience to people’s lives, but also provides opportunities for fraudsters to carry out illegal fund-raising fraud. In recent years, in order to meet people’s urgent needs for online investment and financial management, various online trading platforms have sprung up, dazzling. Fraudsters took this opportunity to gradually combine offline illegal fund-raising activities with the Internet, and launched a wide variety of new methods of online illegal fund-raising and fraud, which are hard to guard against. In order to further improve the people’s ability to prevent illegal fund-raising fraud, this paper sorts out three types of typical illegal fund-raising cases, summarizes and analyzes the routines of illegal fund-raising in the Internet age, lists the harm of illegal fund-raising to the society, the public and the financial sector, and summarizes the risks of illegal fund-raising. Corresponding preventive measures are put forward.
A typical case of illegal fundraising
When fraudsters in various countries used the Internet to explore how to extract the last penny from people’s wallets by being familiar with human weaknesses and proficient in financial operations, Charles Ponzi, an Italian born in 1882, invented a new method of fraud, which is Using the money of new investors to pay interest and short-term returns to old investors, by creating the illusion of making money, and then defrauding more investment, this is the famous “Ponzi scheme”, which is the ancestor of the pyramid scheme (Pyramid scheme). In our country, this kind of scam is also known as “removing the east wall to make up the west wall” or “empty gloves and white wolf” illegal fund-raising fraud. The “Ponzi scheme” led by Charles Ponzi is a general term for investment fraud in the financial field. Let us start with the “Ponzi scheme” to introduce three typical cases of illegal fundraising fraud in detail, and uncover the origins of illegal fundraising fraud. Mysterious veil.
(1) The ancestor of financial fraud – “Ponzi scheme”
In 1903, the United States was in a period of rapid development. Various industries such as steel, oil, railways, banks, automobiles, and catering were booming. Everyone was dreaming of the American dream, including young Italians who had just set foot on American soil. Ponzi, the mastermind behind the “Ponzi scheme”. In order to make a living, Ponzi worked as a grocery store clerk, a salesman, a dishwasher, and a bank employee, but he could not get rid of poverty until the summer of 1919, when he found that he bought return vouchers in Spain and sold them in the United States. You can earn a 10% spread, which is a considerable profit. Since there was not enough principal, he called the American people to participate in crowdfunding and promised: “45-day investment period, 50% return”.
At the beginning of the scam, he trained agents, developed new customers, and encouraged the general public to participate in investment. When the first batch of investors received the promised returns after 45 days, they were overjoyed and joined friends and family to make additional investments. After the approved investors get the return from Ponzi, they will spontaneously promote it to others and attract new people to join. But in fact, Ponzi did not use the crowdfunding money to buy the vouchers, but to pay the interest of the previous investors, and so on. , and the next level of beneficiaries. In July 1920, the front page of The Boston Post revealed Ponzi’s scam. The government quickly intervened in the investigation. Ponzi was imprisoned, but the life savings of 40,000 people could never be recovered.
Since then, this “money begets money” scam has been like a bone-eating specter in the financial world, traveling across the ocean and repeatedly banned until modern times.
(2) Modern investment-based illegal fund-raising
Highly deceptive investment strategies and tempting speculative prospects increase the credibility of scammers. In recent years, with the increasing complexity of financial operations and the increasing popularity of Internet applications, the channels and scope of modern illegal fundraising to attract investors have further expanded, and the flow of funds has become more and more difficult to track, making it more difficult for criminals to uncover lies. Madoff Fund was the hedge fund with the largest asset management scale in the world at that time. It attracted countless investors who believed in authority. The fund used an Electronic trading system for the first time, promising faster transaction speed and lower commissions. The amount of fraud exceeded 600. billions of dollars, and most of the defrauded people are Wall Street elites. In China, the “Pakistan Railway” project promoted by “inventor” Bai Zhiming boasted that it could solve the problem of traffic congestion. , the amount of fraud is as high as 4.886 billion yuan.
The above is just a preliminary exploration of the integration of illegal fundraising and the Internet. Most operations are still concentrated offline. If you feel that you have little assets, do not know how to invest, and cannot be deceived, then you can take a look at the following “online course” type of trading cases of illegal fundraising fraud.
(3) Internet “Ponzi Scheme” is hard to prevent
In 2018, an online education platform in Shandong was established. Its operation model is very simple. It encourages victims to register for the “Teacher Account” to publish courses at the original price, and then allows the same victim to register for the “Student Account” to purchase courses, and the platform returns in the form of “education subsidies”. The user pays 10% of the course fee. In this way, the user can earn an “educational subsidy” of 40 yuan by uploading a course of 400 yuan, but it takes a week to withdraw. A seemingly sure-fire way to make money, after fraudsters used QQ and WeChat groups to hype it up, it quickly attracted a large number of investors. The education platform used the money of a new wave of investors to subsidize the previous wave of investors, and Continue to increase publicity to continue to attract new investors. Like the “Ponzi scheme”, such a “new to old” platform cannot last as there is no profit point. When the number of users of the platform decreased and the investment funds plummeted, the investors ran away, and the company went to the empty building.
Knowing the “stable profit without loss” type of online illegal fund-raising fraud, let’s look at another case of “zero-risk investment” type of illegal online fund-raising fraud.
In 2018, a “Qubu” APP known as “you can make money by walking” swept the circle of friends. After paying a registration fee of 1 yuan, users can get points by walking, and the points can be exchanged for items in the “Qubu” APP mall , to achieve “walking to make money”. By September 2019, the registered users of the “Qubu” APP had reached 73 million. The platform lures users to “pull people” by increasing the speed of point acquisition, and then spreads false listing information, claiming that the worthless points are original shares, inflating the price of points, and charging transaction fees for points. profit. But when the points bubble burst, the last user was left unattended, and the points turned back into worthless virtual numbers.
2. The methods and routines of illegal fund-raising on the Internet
In the past two decades, with the rapid development of the Internet, the tendency of fraudsters to carry out the crime of illegal fund-raising on the Internet has become more and more obvious. The scam as a whole presents prominent features such as a large number of people involved, a huge amount of money involved, a strong temptation to deceive, and a rapid spread. The modus operandi generally includes: “Four steps”: drawing cakes, building momentum, attracting money and running.
(1) painting cake
First of all, criminals will draw a big “cake”, and various high-level words such as “blockchain”, “virtual currency” and “quantum technology” will become the embellishment of this “cake”, which will whet the appetite of potential victims. It will also add “rich oil red sauce” such as “not to be missed”, “not to be missed”, “rapid appreciation”, etc., to urge potential victims to gobble this “cake” into their stomachs.
(2) Build momentum
Fraudsters usually also hold various campaign activities, such as holding press conferences, organizing group activities, and giving small gifts such as rice noodles and oil. They especially like to set up WeChat groups and QQ groups, and send true or false “technical certification” in the group. “Award-winning certificate”, and even screenshots of income receipts, in order to enhance their credibility and expand their influence.
(3) attracting gold
At this point, the victim has stepped into the trap set by the fraudsters with one foot. After tasting various sweetness such as cashback and dividends, they will not only continue to invest more, but also mobilize their relatives and friends to join together. Makes the amount of funds raised more and more.
(4) Running away
Illegal fundraising projects can only tear down the east wall and make up for the west wall. After a period of time, the project will always break the capital chain due to the slowdown in the number of participants, the boss will run away, and the victims will suffer economic losses, and years of savings will be wiped out.
The dangers of illegal fundraising
(1) Endangering social stability
Illegal fundraising using the Internet as a platform often involves a large number of participants and involves a wide range of areas. Once the incident occurs, the fraudsters have already transferred their assets and fled, and the victims either choose to suffer the consequences themselves, or choose to take various means to protect their rights. The spread of anxiety can easily lead to mass incidents, resulting in cross-regional social security problems.
(2) Endangering personal property safety
After fraudsters defraud property, they usually splurge or transfer quickly. After the incident is exposed, it is difficult for most victims to recover their property. The “Regulations on the Prevention and Disposal of Illegal Fund Raising”, which came into effect on May 1, 2021, stipulates that “the fundraiser shall bear the loss”, which means that the victim can only use other means for the loss caused by his participation in the illegal fundraising. (criminal, civil) settlement.
(3) Affecting the financial order
In order to attract public investment, illegal fundraising often raises the price of things so that they exceed the value of the things themselves, forming a bubble economy. After the capital chain is broken, the bubble will be punctured, damaging the interests of the public economy, disrupting the social and financial order, and even destroying the public’s perception of it. Trusted by legitimate financial institutions.
4. How to ensure safety in investment
(1) Identify formal channels
Investors need to identify and invest in companies that have been legally approved by the banking regulatory agency and have financial licenses. If the trading platform is not constrained by a formal supervisory agency, the legitimate rights and interests of investors cannot be effectively protected, and if something goes wrong, investors often have to bear the consequences themselves.
(2) Recognize investment risks
Fraudsters often use sophisticated professional vocabulary to cover up false investment strategies, and promote low-risk or even zero-risk investment. Therefore, before investing, investors must ask clearly about investment principles, understand investment risks, confirm company credit guarantees, and avoid bosses running away. Road and investment funds have nowhere to recover.
(3) Don’t be greedy for petty bargains
Greed tends to overwhelm people’s reason and make people give up thinking. Fraudsters seize this weakness of human nature to defraud, attract investors through tempting prospects, win investors’ trust through small gifts, and finally Trapped investors with small rebates. It should be noted that there is no free lunch in the world, only free traps. The most important thing is to calm down, restrain greed, and don’t covet petty cheap.