I admire them in the same way that I admire mosquitos, cockroaches and rats. I respect the extent of their achievements and their fortitude but I still find them immensely irritating, unpleasant and worthy of a swift hit on the head with a blunt instrument.
Let me explain before you think I’m a Scientologist supporter of scammers and ripoff artists.
L Ron Hubbard achieved what many have fantasized about but few have ever achieved. He founded a religion, became immensely wealthy, had access to his choices of intoxicants and women, owned his own private navy and died in luxurious drug-addled haze. Who could ask for better? Yes, of course he lied about his military career in the US Navy (he was incompetent and considered unsuitable for command), his scientific career (he claimed to have studied nuclear physics but in fact he attended one class and got a ‘F’ grade) and his adventures as an explorer (he lied) but he did show promise as the author of ninth-rate science fiction novels. (You can see his unathorized biography here.)
It was this skill that enabled him to create his own religion and to persuade people to hand over epic quantities of money. I admire that, in a bizarre way.
Peter Popoff was (and remains) as much of a con-man. His ability to “see” the personal details of sick people who came to his conventions was remarkable. He would “know” everything about his gullible victims in the audiences, including the illnesses they were suffering and even their home addresses. Of course this was all a huge con. The attendees would all fill in a questionnaire as they arrived and then Popoff’s wife would read the details to him over a radio link to a tiny receiver in his ear. After Popoff’s scam was exposed by James Randi bankrupt rapidly ensued. However that didn’t stop him bouncing back a few years later appearing on TV selling “miracle spring water”, “holy sand” and more smarmy cons. Like Hubbard Popoff is a disgraceful conman but you can’t deny that he has backbone and a complete absence of shame.
Bernie Madoff has the great distinction of having committed the greatest financial fraud in US history. Estimates vary but the official estimate is that investors lost up to $17 billion. Yes, billion, not million. He’s currently in prison and, if he behaves himself inside, he’ll be released at the age of 201.
Madoff’s scheme was simple. He would take money from investors and instead of actually investing it, he would just deposit it into an account with Chase Manhattan Bank. When investors wanted a return on their investment he’d just write them a cheque from that account. Because most investors expected their money to stay “invested”” for a long time they rarely wanted their entire stake back. He was, as they say, robbing Peter to pay Paul.
This is the essence of a Ponzi scheme, named after Carlo Ponzi. Ponzi actually learnt the technique from a former employer, a bank that focused on Italian immigrants to Canada, Banco Zarossi. Wikipedia describe the Zarossi scam perfectly.
“Zarossi was funding the interest payments not through profit on investments, but by using money deposited in newly opened accounts.”That’s the lesson that Ponzi learned and what remains at the heart of a Ponzi scheme to this day. Ponzi’s later scheme pretended to exploit the difference between the price of postal coupons in Italy compared to the USA. In theory you could buy them cheaply in Italy and sell them much more expensively in the US. It’s what economists called “arbitrage”. However what Ponzi wanted was investors. They thought they were buying into the postal coupon scheme but in fact they were victims of the same scheme that Zarossi had run. Interest wasn’t being earned on investments at all, it just came directly from the deposits other victims had made. It all relied on the investors choosing to continue investing rather than cashing in their profits. So long as there was enough cash in the account those fake interest payments could be made. That’s a Ponzi scheme.
They haven’t gone away.
Currently doing the rounds in Botswana is a scheme calling itself “Three Link Connections”. This is how one potential victim described their scheme:
“The company has identified a market in Africa for Chinese electrical appliances but do not have enough money to buy stock direct from the manufacturer in China. When we are recruited we are told the money we invest will be used to purchase the stock that will be later sold the ready found market in Africa at a higher price.”You see the “arbitrage” opportunity? Buy cheap goods in Chine and sell them at a higher price here? In theory there’s no problem with that. But there’s more. The person running this scheme has already been prosecuted for running identical Ponzi schemes in South Africa. That’s enough to be suspicious I think.
EurExTrade that promised 2.9% per day. A year at that rate would convert an investment of P1,000 to P34 million.
The spirit of Charles Ponzi lives on!