Ex-footballer Michael McIndoe accused of Ponzi fraud

Coventry City v Ipswich Town

Former Wolves and Coventry midfielder Michael McIndoe is under investigation for allegedly tricking hundreds of footballers and friends into investing in a dodgy investment scheme.

Creditors claim that he ran a Ponzi-type scheme in order to fund a millionaire lifestyle. According to the Daily Mail, this included hiring a £2 million mansion for £27,000 a week and spending £40,000 on champagne in one day at a beach club party.

He lived in the five-star Mayfair Hotel, paying £4,000 a week for a suite, and also rented a Belgravia apartment.

"He was the Mr Big in Marbella, buying loads of champagne and girls all over the place. He even had a bodyguard," one footballer told the paper, adding that he'd lost around £75,000 in the scheme, despite being promised a 20% return on his investment.

However, earlier this month, the 35-year-old told a bankruptcy court that he now had no money or bank accounts, and was living on the charity of friends and family.

HIs sceme is believed to have fooled as many as 300 victims, who were intitially given the 20% return they'd been promised.

"People were convinced when they saw him paying out but then he suddenly closed the scheme down," said one victim. "He kept telling me to wait and that I would be a wealthy man."

Ponzi schemes can look extremely attractive. As the first investors draw in a second round of victims, they take their money to pay themselves a large return.

This makes the scheme look like a good investment, drawing in further investors, whose money is used to pay the second set. But it relies on bringing in new victims at an ever-increasing rate; and sooner or later, the whole scheme collapses.

Last summer, gambler Nicholas Peter Ford was jailed for a Ponzi scheme that conned 18 victims, including a friend with a disabled child. He tool £1.3 million from his victims - but paid out just £245,000.

The biggest-ever Ponzi fraudster is believed to be Bernie Madoff, who conned his victims out of an eye-watering $65 billion. He got away with it largely becaue of his highly-respectable reputation as a financial expert - indeed, he'd even been an advisor to the US Securities and Exchange Commission.

The Financial Conduct Authority reminds investors that if it seems too good to be true, then it probably is.

"Beware of get-rich-quick schemes or investment opportunities that offer unrealistic returns, and consider getting independent professional advice before making any investment decision," it warns.

"Also be careful when an opportunity to invest your money requires you to bring in subsequent investors to increase your profit – and be especially wary if you are told you can earn more from introducing investors than from the return on investment."

To be on the safe side, it suggests, stick to financial services firms that it's authorised: there's a register here.

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