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  • Poterack Capital Advisory

What are “Ponzi” Schemes and How to Know Your Investments Are Protected from Fraud.

In the financial world, the term "Ponzi scheme" evokes memories of Charles Ponzi, a Boston businessman whose fraudulent investment operation in the 1920s left a trail of financial ruin. A Ponzi scheme is a deceptive investment strategy where returns to existing investors are paid using the capital from new investors, rather than from actual profits generated through legitimate investments. Poterack Capital Advisory (PCA) recognizes the dangers posed by such schemes and is committed to ensuring the safety and security of its clients' investments.

The Anatomy of a Ponzi Scheme:

Ponzi schemes operate on the promise of exceptionally high returns, luring in unsuspecting investors with the illusion of lucrative opportunities. However, these returns are nothing more than smoke and mirrors. In reality, the funds distributed to existing investors come from the continuous influx of money from new investors, creating a cycle that is unsustainable without a constant stream of fresh capital.

The Consequences of Ponzi Schemes:

Ponzi schemes rarely end well for investors. These fraudulent operations result in the theft of hard-earned money from trusting individuals, often leading to financial devastation. Families can be torn apart, and the perpetrators of such schemes leave a wake of confusion and anger among their friends and loved ones. To combat this, Poterack Capital Advisory emphasizes the importance of safeguarding clients against the devastating consequences of Ponzi schemes.

Protection Through Third-Party Custodians:

At PCA, the key to protecting clients lies in the utilization of independent third-party custodians. Unlike some investment operations where investors may be required to write checks directly to the company or individual managing the funds, PCA ensures that clients never write checks payable to Ryan Poterack or any PCA employee. Instead, funds are directed to reputable custodians such as Charles Schwab, providing an additional layer of security against fraud.

The Role of Custodians:

Custodians play a pivotal role in safeguarding clients' investments. They issue statements, handle tax reporting, and maintain a clear separation between the advice provided by financial advisors and the actual handling of funds. Poterack Capital Advisory emphasizes that advisors do not have direct access to clients' money, ensuring that they cannot misuse or redirect funds for personal gain.

Protecting Against Fraud:

Regardless of the size of the financial firm, Poterack Capital Advisory assures clients that they enjoy the same level of protection against fraud as any other reputable firm in the country. The use of independent custodians, stringent protocols, and a commitment to transparency are central to PCA's strategy for safeguarding clients' investments.


In a financial landscape where trust is paramount, Poterack Capital Advisory stands out as a beacon of security for our clients. By actively guarding against the pitfalls of Ponzi schemes through the use of independent custodians and strict protocols, PCA ensures that clients can invest with confidence. The commitment to transparency, coupled with the protection offered by reputable custodians, sets Poterack Capital Advisory apart as a trusted partner in financial management. If you seek peace of mind and would like to learn more about protecting your investments, don't hesitate to contact Poterack Capital Advisory. Your financial security is our top priority.

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