Ponzi Scheme Reaches World of Gift Cards

With so much in the news lately about shady brokers and Ponzi schemes, it seemed like only a matter of time until the problems reached the gift card world. 

Craig Ginsberg, a Nassau, NY man, has recently been arrested for just such a scheme.

Prosecutors claim the scheme began when Ginsberg told friends, family, and other potential investors that he could get gift cards to notable stores like Target, Toys R Us, and Best Buy, at 50 cents on the dollar.  Investors only had to wait a few months to see the returns.

Once he had amassed a sizeable amount of money, Ginsberg began purchasing gift cards at full price and delivering them to his investors claiming to have purchased them for 50% of their value.  As news of the investment success spread, more and more individuals were willing to try their luck with Ginsberg.  The scheme grew and eventually spread to timeshares and luxury boxes at sporting events.

The scheme fell apart in April of last year when prosecutors claim Ginsberg could no longer pay beck his investors.  At the time, Ginsberg had lost over $4 million of investors’ money.  When he learned of his impending arrest, he checked into the psychiatric ward at Nassau University Medical Center. 

Ginsberg was arrested upon his release from the hospital.  His lawyer says Ginsberg will plead not guilty, claiming he was only involved in a bartering business.  Whatever the case, it will be interesting to see how the situation for Mr. Ginsberg plays out.  Be sure to do your research when an opportunity seems too good to be true.