Abstract
This research aimed to identify red flags of the Modaraba scam and offers some suggestions on the prevention of Ponzi schemes. A thematic analysis of the data, collected through semi-structured interviews with eighteen sample respondents, enabled the researchers to conclude on the substance of the scam. Results revealed that critical red flags of the scam are exorbitant profits, void investment agreements, multifaceted, complex and unregistered operations, exponential and participative rate of agents' commission, and deferred periodic profits. Findings further suggest that investors and state-run regulatory authorities can help in the prevention of Ponzi schemes with the due exercise of their roles.