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Old 20 September 2018, 03:34 PM
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Icon605 Three Men Charged In $364M Ponzi Scheme

Article here

The morning show I listen to commented that it takes brains to pull off something like this for so long--brains that could just as easily have made money legitimately.
There is also a link to a questionnaire if you think you've been scammed.

Last edited by DawnStorm; 20 September 2018 at 03:35 PM. Reason: Forgot to post link. Duh!
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Old 20 September 2018, 04:37 PM
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I think it is 1000 times easier to make $73 million in a Ponzi compared to any legitimate vocation.

While on one hand, they clearly thought things through well enough to keep it going for so long; On the other hand conspicuous spending and lack of an escape plan shows a fatal lack of forethought.

Would it be illegal to teach a seminar on how to run a Ponzi scheme?
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Old 20 September 2018, 06:42 PM
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Ponder

Isn't it mathematically impossible to keep a Ponzi scheme running forever?
Theoretically I suppose it isn't, but in reality, you'll run out of 'investors' sooner or later.
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Old 20 September 2018, 07:06 PM
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Don't recall which cartoon show it was (context makes it probably The Simpsons)

Person A: The best part is, everybody wins!
Person B: Actually, the last guy kinda gets it in the shorts.
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  #5  
Old 20 September 2018, 07:07 PM
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Quote:
Originally Posted by DawnStorm View Post
Isn't it mathematically impossible to keep a Ponzi scheme running forever?
Theoretically I suppose it isn't, but in reality, you'll run out of 'investors' sooner or later.
Technically yes, it's impossible. However, if you keep your investors reinvesting their "earnings", you can keep going for a long time. Once your investors start taking "money" out, that's when you need more new investors.

John Doe invest $1,000 and makes 100% in one year, at the end of the year, he has $2,000, and keeps it rolling. Repeat until enough John Doe's want to pull money out and you don't have enough assets.

[Of course this is highly simplified!]

OY
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Old 20 September 2018, 07:21 PM
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Quote:
Originally Posted by overyonder View Post
Technically yes, it's impossible. However, if you keep your investors reinvesting their "earnings", you can keep going for a long time. Once your investors start taking "money" out, that's when you need more new investors...
And that is how the 'best' Ponzi schemes work, easily enough. When people are making a whole lot of money, albeit on paper, they are very unlikely to take the money out to put it somewhere else. Often times they do the opposite, taking other investments and moving them to the Ponzi scheme.

The few people that request a payout our often dissuaded from taking everything out. What they do take out becomes 'proof' that the investment is legitimate.
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Old 20 September 2018, 07:46 PM
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Quote:
Originally Posted by Beachlife! View Post
The few people that request a payout our often dissuaded from taking everything out. What they do take out becomes 'proof' that the investment is legitimate.
And also, you can "prove" withdrawals that were paid to customers by forging documents... Pretty scary actually.

OY
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Old 20 September 2018, 08:52 PM
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In short, the trope that successful criminals (most commonly mob kingpins and white collar thugs) are somehow geniuses by default should probably die.
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Old 20 September 2018, 09:23 PM
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Quote:
Originally Posted by overyonder View Post
Technically yes, it's impossible. However, if you keep your investors reinvesting their "earnings", you can keep going for a long time. Once your investors start taking "money" out, that's when you need more new investors.

John Doe invest $1,000 and makes 100% in one year, at the end of the year, he has $2,000, and keeps it rolling. Repeat until enough John Doe's want to pull money out and you don't have enough assets.

[Of course this is highly simplified!]

OY
Did you just describe Enron?
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Old 20 September 2018, 09:30 PM
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FYI, the difference between a pyramid scheme and a Ponzi scheme is that in a pyramid scheme the marks know that their earnings depend on bringing in people under them*. In a Ponzi scheme, they think their earnings are due to shrewd investing.

* AIUI, a pyramid scheme differs from MLM in that the former puts more of the emphasis on bringing in people and less on actually selling stuff. For example, if you only make money when the people you bring in sell stuff, it is more likely to be a MLM and legal. But if you make most of your money from the people you bring in buying into the plan, then it is more likely a pyramid scheme**.

** YMMV, IANAL, SAR, PoaWBB, EOE
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  #11  
Old 21 September 2018, 03:12 PM
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Quote:
Originally Posted by crocoduck_hunter View Post
Did you just describe Enron?
Enron was actively manipulating the price of goods, and the goods actually existed (natural gas, mainly). Their investment scheme forced the price of the gas unnaturally high. The customers got it in the shorts.

Which is why antitrust suits were filed (these settlements are for Missouri and Kansas; there were others for California--I had the glory job of collecting all the data and correlating it for my employer).

Seaboe
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Old 21 September 2018, 05:34 PM
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I believe it had to something to do with creative accounting as well, rather than merely manipulating prices for customers. As in, they claimed operating expenses were actually investments in capital or counted assets twice or sold things to their subsidiaries to make it look like something other than a zero-sum exhange, which, taken together, allowed them to claim a profit even when they didnít and so maintain inflated stock prices and keep their investors from bailing when things werenít going so well.
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