Who among us hasn’t heard the importance of who you know, and that the best sales leads are referrals? Too many times these “truths” find their way into investment fraud and Ponzi schemes. Milton Dosal, a 29-year-old Colorado fast talker, bilked 41 investors in just 14 months. While the total amount he absconded with was fairly small, the case is a great reminder of how people fall every single day for fraudulent investment schemes.
The Ponzi Scheme Formula
Dosal implemented a well-worn path to developing a successful Ponzi scheme:
- Make yourself look successful. Establish yourself as an authority.
- Find a group of people with similar interests, and become one of the group members.
- Prove your success by giving some people great financial rewards who will naturally refer others to you.
- Lie to people about the on-going investment earnings, accompanied by falsified documents.
From Appliance Installer To Pretend Day Trader
Dosal was employed as a home appliance installer, but he told people he was a successful day trader. In 2017 he did
generate $120 in profit off $21,658 in penny stock trades. However, after receiving his first $22,000 from investors, he promptly lost over $17,000. Dosal quit trading but kept gathering peoples’ money to invest. He made the obligatory Ponzi scheme payments to keep the referrals coming and used the remaining investor funds for living expenses, gambling, and jewelry. SEC Complaint
Car Enthusiasts and Air Force Academy Cadets
Dosal met some of his financial fraud victims through car club events. His initial investors were fellow car enthusiasts and/or Air Force Academy cadets looking to make a little extra cash. One of Dosal’s first investors trusted him with $5,000. Dosal sent the investor a forged screenshot of his account, indicating he more than doubled his investment. The investor was then happy to share his story with other cadets. Dosal sealed the deal with them by sharing his military background. SEC Complaint.
Social Media and Bird Dog Fees
Dosal promised some referral sources, referral fees. He also contacted people through social media and text messages. He attracted potential investors by telling them to expect five to ten percent weekly returns. SEC Complaint.
In the end, the investment scheme died as the money dried up. Dosal was not a registered broker, wasn’t a day trader, and had faked investment documents showing investors they earned a profit.
Where Is Dosal?
At the time of this writing, Dosal entered into an agreement with the SEC to return funds and pay an equivalent penalty to the government. He was not required to admit his guilt. SEC Press Release
Only time will tell if this young man will turn his life around or get involved with digital currency scams, real estate investment fraud, or even try selling fraudulent oil and gas deals.
Fraudulent investment and Ponzi schemes abound. Everyone is a potential target, even if you have very little to invest. Even savvy investors fall prey not just to strangers, but also to friends and acquaintances. The scammers get better every year making their lies look believable.
We hope all your financial investments are safe and profitable. But if you find yourself searching for an experienced commercial litigation lawyer or an oil and gas attorney, we are here to help.