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High-Yield Investment Programs

Securities Lawyer Jonathan Kurta
By: Jonathan Kurta Author

High-yield investment program (“HYIP”) is another term for a familiar scheme: a Ponzi scheme. These schemes are fake investment opportunities that pay illegitimate “returns” to investors using cash from newer investors, creating the illusion that the investment is functioning as advertised. Ponzi fraudsters keep most of the money that was supposed to go toward an investment opportunity for themselves.

When advertising high-yield investment programs, promoters claim they have an exciting investment opportunity that offers a spectacular yield. These especially high returns should always be a red flag that the investment is too good to be true.

The California Department of Financial Protection and Innovation warns that high-yield investment programs may involve depositing money into a crypto wallet. In some cases, fraud victims log into websites that seem to show their investment has increased in value. The would-be investors may even be able to make withdrawals from their accounts. Inevitably, however, the website shuts down and the fraudsters misappropriate the majority of the deposited funds.

What is High Yield?

High-yield investments offer yields well over a normal return. For instance, index funds that track the S&P 500 typically can earn returns of 10% and high-yield savings accounts offer 5% returns. 

What is High-Yield Investment Risk?

The truth is that high-return investments are almost always risky gambles. The investors who enjoy significant returns are merely lucky and not especially skilled at predicting the market. Most investors do not have the type of wealth that makes these types of gambles worth the risk. Research has shown that investors who invest in ordinary, low-cost index funds earn more in the long run than investors who pick stocks themselves.

Do Low-Risk, High-Yield Investments Exist?

There are low-risk investments that offer higher returns than ordinary savings accounts. Money market accounts and online high-yield savings accounts offer returns of up to 5%. These could be classified as short-term, high-yield investments. Unlike government bonds or certificates of deposit, which have set maturity dates, investors can access their savings account funds as needed.

What is the Safest Investment with the Highest Return?

Returns on safe investments typically depend on the rate of inflation. Besides the money market and high-yield savings accounts already mentioned, The Wall Street Journal touts I Bonds as an example of low-risk, potentially higher-yield bonds. They are issued by the U.S. Treasury and therefore feature very little risk of default. But because it is impossible to predict future rates of inflation, it is impossible to perfectly predict the lowest-risk, highest-return investment.

The Difference Between HYIPs and High-Yield Bonds

High Yield Investment Programs are not the same as high-yield corporate bonds. High-yield corporate bonds are legitimate – albeit risky – investments. They come with more risk than ordinary bonds because of their higher risk of default. Because they are issued by corporations, their yield depends on the success of the business.

  • Bonds come with credit ratings that are based on the creditworthiness of the issuer.
  • High-yield bonds are also known as “junk bonds” because of the low creditworthiness of the issuers.

High Yield Investment Program: Real-Life Examples

Two recent cases demonstrate how High Yield Investment Programs can defraud excited investors of millions of dollars.

A Classic Ponzi Scheme

In 2023, the SEC charged a Florida resident with a $112 million HYIP fraud that defrauded approximately 1,500 investors. Supposedly, investors’ money would go toward adding to a logistics company’s fleet of semi-trucks. The SEC alleges the unregistered securities advertised 12.5% to 325% guaranteed returns.

Instead, the scammer behind the fraud allegedly used $70 million to make Ponzi-like payments to previous investors. He allegedly kept $14 million of investors’ funds and used $19 million for risky equities trading. This trading allegedly lost $1 million of investor funds.

Fake Investment Firms

Another recent SEC action involved a Lithuanian man charged with creating a website promoting a fake investment that sought to appear credible by using pictures and biographies of fake industry professionals. This scam managed to raise over $4 million from approximately 64 investors.

How to Detect a High-Yield Investment Program Scam

Regulators have determined a few clear signs that an investment opportunity is actually a HYIP.

Online Solicitations. Genuine investment opportunities generally will not solicit investments via Facebook or other websites. You should only buy securities from registered brokers. Check your broker’s FINRA license on

HYIP Calculators. Beware spammy online calculators. These websites often advertise suspect investments.

Lack of Information. Fraudsters are often secretive about how the HYIP works. Mentions of foreign currency and arbitrage are common hallmarks of Ponzi schemes.

Overseas Investment. To obfuscate the true nature of the investment, the fraudster will pretend that there is some overseas component that helps explain some of the lack of information.

Unusually High Returns. Returns of higher than 10% on legitimate investments are highly unlikely. Promised returns of over 100% are almost certainly fraudulent.

Guaranteed, Regular Returns. There is no such thing as a guaranteed return. Regular returns that happen no matter the economic conditions should also be regarded with the utmost suspicion.

Unregistered Investments. Legitimate investments register with the SEC. If you cannot verify an investment’s registration, it is most likely fraudulent. There are such things as exempt securities, but these are typically only available to the wealthiest investors due to their elevated degree of risk.

The SEC also warns of the mention of “prime banks.”

What If My Broker Recommended a High-Risk Investment Program?

Even legitimate, registered financial advisors have been known to recommend high-risk investment programs. There is no excuse for these recommendations – basic due diligence should weed out high-risk investment programs for prospective investors. If you suffered losses after a financial advisor recommended a high-yield investment program, you may be able to recover. Contact our securities attorneys for a free case evaluation: or (877) 600-0098.  

Securities Lawyer Jonathan Kurta
Written by: Jonathan Kurta

Jonathan Kurta is an accomplished securities attorney and a founding partner at Kurta Law.