NOTE - IF YOU DON'T BELIEVE
THIS STILL HAPPENS THEN TAKE A GOOD LOOK AT WHAT BERNARD MADOFF DID, he
defrauded investors out of US$50 Billion by using the exact same methods as
In 1920 Ponzi was back in the USA and working in the Postal system where he
discovered a (legal) discrepancy; he could buy a 'Postal reply coupon' in
Europe for a penny (1 cent) and then cash it in for a Nickel (5 cents) in the
USA. A 400% profit margin is nothing to sneeze at.
Ponzi realised that there was no way of making this work full time as the rules of the day stated that you could not redeem more than ten at a time.
So Ponzi changed his angle and decided to do it another way - by getting
others to invest in him!
So they all returned and re-invested with Ponzi, but they also told their
friends and family about this great system so Ponzi was given thousands of
dollars to invest. As the story of this investment spread more and more people
gave Ponzi money, with this new influx of money he was able to pay back the
earlier investors with the promised interest.
At the peak of the scheme Ponzi was pulling in over 1 million dollars a
week, not bad money for the 1920's.
www.mark-knutson.com (A very good, long read and goes into it in a lot more detail)
www.aplus.net/docs/facts/history-of-the-ponzi-scheme.htm is another good resource.
So what does Charles Ponzi have to do with today's scams?
Well, these schemes don't go by the name of 'Ponzi scheme', they go by another name - a Pyramid scheme.
Yep, if someone invites you into a Pyramid scheme then you're about to get shafted unless you are one of the first to participate (the people at the end are the one's that get shafted).
These schemes are going on all over the world and almost daily another one
is starting; courts are full of people that run these schemes.
In 1997 the Government of Albania lost most of its money to a Pyramid scheme
so don't think only dumb individuals get caught up in it.
I've been on the Internet since 1996 where Pyramid schemes were big in 1998 and then again in 2001 (based on the amount of spam email I receive, which is about 80 per day). These schemes appear daily on major forum boards.
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