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Hedge Funds Hit by Ponzi Scheme
You can bet that if the returns are enticing enough, even hedge fund managers can be tricked.
A person by the name of John “Scott” Clark raised some $47 million for his firm, Impact Cash from 2006 till now. John offered his investors returns of up to 80% per year.
Impact Cash firm is supposedly a payday lender. A payday lender gives short term loans of less than a month at astronomical interest rates (10 to 20%). Payday loans are quite common in USA to help people tide over their cashflow problems till their next paycheck. Due to the high interest rates, it also means that many of these people who rely on payday loans are forever stuck in the poverty cycle.
Last September, a few hedge fund managed invested $15 million with John. The returns that were promised to them was 55% a year. That was just months before Impact Cash finally collapsed.
Looks like some hedge fund managers really don’t learn…