Agent

Real estate fraud ring crushes investors’ finances

Paying claims to victims no easy task
Published on Nov 10, 2004

Linda K. Frykholm developed a Ponzi scheme promising to pay investors a 100 percent return on their money within a month. She persuaded people to invest $15 million in her get-rich-quick scheme even though she had no means to back up her promises. A classic Ponzi scheme, the judge explained, involves borrowing money from investors, promising them a high return, and using funds from later investors to pay those high returns. Purchase Bob Bruss reports online. As a result, the first investors who receive the high returns recommend the investment to their friends, he noted. Eventually, the Ponzi scheme collapses when more gullible investors can't be located, the judge added. "Her only relevant credential was a 1994 conviction for theft and forgery, which she did not tout; her 'business address' was a mail drop," the judge reported. "When Frykholm's scam imploded, she had net receipts of about $10 million (having taken in $15 million and paid out $5 million), of which prosecutors ha...

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