Celeb punters to lose $15m in Ponzi scam

[dave nz]

A-LIST investors are reportedly set to lose $15 million in a Ponzi scheme that involves betting on Australia's biggest horse races.

Celebrities, sporting figures, businessmen and football identities are about to be caught in the alleged sting.

The man behind the scheme, who cannot be named, has used the money to finance a lavish lifestyle and his gambling addiction, according to racing sources.

The businessman courted big-name identities with promises of ridiculously large returns. In return, he asked for their guarantee to keep the scheme a secret.

But in recent weeks, so-called investors have hit brick walls when asking for their money to be returned.

The businessman allegedly claimed he was laying bets of up to $200,000 for investors and getting odds of eight to one in horse races, which bookmaking sources say is impossible.

A Ponzi scheme is one of the simplest yet most effective scams.

It operates by using funds from new investors to pay interest to other investors or to the same investor.

Racing sources said the money coming into the scam was drying up and the fraud would be revealed when dividends were due at the end of the March quarter.

One investor tried to get his $60,000 out recently and had to fight to even get half of it returned, they said.

Another man fears he will never see his life savings of $250,000 again.

The scammer is a big-noter at the track and places large bets on his own behalf, according to Bookmakers.

"Part of the money deposited by early investors is then used to pay their first dividend cheques or interest," ASIC said of Ponzi schemes.

"The swindler continues paying them dividends for a couple of months until they are more comfortable and decide to invest more.

"Such schemes usually fall over because the promoter starts to spend the money too quickly, or the pool of investors starts to dry up."