Biggest Investor Mistakes: iPonzi, Anyone?

By Ben Steverman - 2011-09-13T22:48:05Z

Photograph: Courtesy of Apple

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An iPonzi Scheme

Apple, IPod, a 30 percent return. That was all some members of Frank Armstrong's country club had to hear before investing with the guy who said he had exclusive rights to distribute IPods in Chile. Armstrong, founder of Investor Solutions in Miami, was wary. "Steve Jobs doesn't need this guy," he thought.

One man, who later became Armstrong's client, put in $100,000. When he wanted to invest another $250,000, Armstrong told him: "With all due respect, this has got to be a Ponzi scheme." He was right. Andres Leonel Pimstein was sentenced in 2009 to 17 years in prison. He'd raised $50.6 million from 146 victims, paying existing investors with new investor money. Overall, victims lost 80 percent of their original investments.