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ATM Funds: The Ponzi Scheme that Won’t Die ☠️

If you are in the real estate or private equity space, you’ve probably come across an offer like this in the past couple of years:


“Invest in automated teller machines (ATMs) located in high-traffic retail locations around the country! Investors will recoup their money, plus an incredible 20-24 percent return, through the fees charged to the ATM customers!”


Sounds like an amazing deal, right? Except this text is actually from a 2009 FBI investigation, where the operators were found guilty of running an $80 million Ponzi Scheme.  


“For months, Netschi and Moore allegedly gave investors various explanations for the non-payments, blaming various banks and software glitches. They even went out and recruited more investors, said the indictment. But they couldn’t raise the funds they needed, and ultimately, an unhappy investor notified authorities.


These ATM ponzi schemes have continued to rob investors – another big bust in 2016 and even this Florida man in 2022, who financed mansions, private jets and luxury cars by luring 700 victims into a complex multi-million-dollar pyramid ATM fund scheme (link).


When a recent ATM Fund offering starting popping up from people I trusted back in 2022, I at first started to fall for the allure – 24.9% returns (paid monthly!), and a bonus for investing the money ASAP! Who would pass up an offer like this?


But as I started to read more into the details, the red flags started to fly:

🚩 If these ATM machines are so lucrative, why shouldn’t I just BUY SOME myself and run them? After doing some research on ATM machines, the average monthly cash flow is only $300/month – nowhere near a 15% ROI.

🚩 How can they offer higher returns for investing the money sooner? That’s not how investments work! But that IS how pyramid schemes work – more money is needed to inject into the bottom of the pyramid to keep the whole thing afloat.

🚩 Digging deeper into the offering details, it was stated that for the first few years of the investment, the returns would actually be made up of my own capital coming back to me – so I would be giving them post-tax dollars, and then having to pay income tax on the money again when it was returned to me!


I passed on the deal, but many of my friends and acquaintances invested in this new ATM fund. As their checks started to roll in, I wondered if maybe I HAD been the fool and this one was actually different.


But last month, I started to hear some chatter – those monthly payments had dropped by 20% the month before, due to “tax reporting issues” (according to the sponsor). Then last month the lower distributions were due to “a one-time accounting issue with a new bank”. This month, there was no distribution, and the sponsor claims to be moving to a quarterly distribution schedule due to “personal issues and government regulation issues”.


Sounds like déjà vu all over again. 🤷‍♀️

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