It’s easy to run a Ponzi scheme, you don’t need anything except fools.
Charles Ponzi, who gave his name to the wonderful fraud was considered
the greatest swindler who ever lived…until of course today.
Being informed of an incredible return on an original investment should,
by definition of the word incredible, suggest money be returned to pocket.
However, as fools and their money are soon parted, Ponzi schemes always work.
Firstly, the Ponzi doesn’t need to do anything. Fools will tell
their foolish friends about this incredible return on their money.
Here’s how it works.
Five Fools, One to Five, all hand Ponzi ten dollars. ($50.00) and
tell their friends how they are going to make twenty percent in a
week on their ‘investment’. Ten new fools want to make 20% on their
money, they hand Ponzi $50. ($500.00)
Ponzi now hands the each of the first five $12.00…see? It worked.
Of course, the ‘extra $10.00 came from Six, who gave Ponzi his
$50.00. But that’s not a problem, because Seven will pay Six,
Eight pays Seven…on and on.
Now Ponzi is getting hundreds of fools begging him to take his money,
and now he begins to take the fools money.
The first set of fools think…hey, what if I invest $100 instead of
ten? So they reinvest.
The scheme gets bigger and bigger until some governmental agency gets a little
bit interested in how this guy can pay such a high yield. What is he paying
the interest from?
By the time the agency gets involved, Ponzi should be sitting on a beach
in Brasil. But alas, being a Ponzi,, certain of his own brilliance, and a bit
greedy, he waits.
Some Ponzi’s are so brazen as to claim that they are being harassed
by the government. This works really well in Third World Countries.
In Jamaica, one fraudster actually had his dupes demanding his
release from jail so he could, (get this) Pay Them. They could not
believe that there was no money.
There are lots of Ponzi schemes running on line right now. You
know the ones, send X dollars to B and you’ll get X+ dollars
Thousands of people do fall for Ponzi schemes because the
first few investors do get that great return. Of course,
If you think you’ve just invested your money in a Ponzi scheme,
if you can get it back, you are ahead of the game. In most cases,
you’ll never see it again.