A Guide to Reporting High-Yield Investment Program (HYIP) Fraud

A high-yield investment program (HYIP) is a term used to describe a fraudulent scheme that claims to produce guaranteed high returns for those who invest. Returns promotors guarantee often exceed well over 100 percent of the initial investment amount.

This promise of a guaranteed return is the motivator to lure investors (mostly beginners) into the scheme. The money received by the fraudster, however, isn’t invested. It’s used to pay for lavish personal expenses, and to pay existing investors their fake returns to keep the scheme running.

In essence, a high-yield investment program is basically a Ponzi scheme. The scheme needs new investors to pay initial investors, otherwise it collapses. It’s in the fraudsters best interest to get new investors, and in an investors best interest to avoid such schemes!

Continue reading our guide to learn more about this scheme, and what you can do to report one to the Securities and Exchange Commission (SEC) or the Commodities Futures Trading Commission (CFTC) if you or someone you know has been a victim. Substantial monetary rewards of between 10% and 30% are available to those with specific, credible, and original information.

As we mentioned before, if it sounds too good to be true, it is. Real investments will always involve some level of risk which correlates to higher potential returns. Schemes that have “no risk” and promise profit do not exist in the real world.

There are some other red flags to be aware of:

• Unclear or complex investment strategy: most HYIP have no base explaining how investors can achieve high returns. Avoid any offer that has an unclear strategy.
• Unnecessary secrecy: these types of programs will ask investors to remain quiet about the “opportunity” and will also be secretive about the stakeholders behind the scenes.
• Fake investment products: be on the lookout for any claim to invest in exclusive products that do not exist.
• Cryptocurrency or forex scams with unrealistic gains: These often prey on people with limited knowledge of these markets.
• High-pressure sales tactics: fraudsters selling HYIP will often use high-pressure sales tactics to get you to invest. Always take your time and never feel rushed.
• Referral bonuses: as we stated above, to keep the scheme going, fraudsters must acquire new investors to pay original investors their fake returns.
• Heavy promotion: would be wary of aggressive sales pitches, fake reviews, and massive social media promotion.
• Unregistered investments: Legitimate investment opportunities are typically registered with regulatory bodies.
• Unlicensed sellers: The people running the HYIP should be qualified financial professionals.

If you’ve spotted any of these red flags, your best bet is to walk away. If you’ve already invested and have spotted any one of these red flags, you may want to speak with a whistleblower attorney who specializes in securities and commodities fraud. They can give you sound guidance if you’ve been a victim or know someone who has been a victim of such frauds.

Whistleblowers who know of a HYIP can report their concerns to the Securities and Exchange Commission (SEC) or the Commodities Futures Trading Commission (CFTC) whistleblower programs, both of which fall under the Dodd-Frank Act.

Whistleblowers who provide the SEC or CFTC with original, credible, and timely information may be eligible to receive between 10 and 30 percent of the recovered funds in a successful case. They may also be eligible to receive protection from retaliation. Award percentage amounts are based on the quality of information provided, among other award factors.

Whistleblowers who report fraud may do so anonymously. But for them to receive an award, they must hire a U.S. based attorney. Regardless, we strongly suggest consulting with a whistleblower attorney throughout the process, as the filing process can be complex and met with many obstacles. Improperly filing a complaint may result in it being dismissed.