This has been in the news lately with that MADOFF guy in NYC. What is a Ponzie scheme anyone know? Forgive my lack of modern knowledge.
Ponzie scheme
- Thread starter spankingman
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oh man... its ridiculous how the SEC (Securities and Exchange Commision), the one responsible to protect and make sure no illegal practices take place, missed or ignored this. I heard on the news yesterday that it took an investigator only 5 mins going over documents that Madoff was up to some fraud... But even after notifying the SEC, they just ignored and failed to look into it.
When you invest in a Ponzi scheme you are getting your own capital back as "dividends", the "profits" are all fake.
Example you invest $10000 with a manager, he hands you back $1000 of your own money a few months later calling it "profit", now he really only has $9000 cash but fools you into believing you own a $10k+ investment plus the $1000 in "profit".
So long as suckers keep stepping up with new money he can keep on making those payments. Eventually it collapses.
Example you invest $10000 with a manager, he hands you back $1000 of your own money a few months later calling it "profit", now he really only has $9000 cash but fools you into believing you own a $10k+ investment plus the $1000 in "profit".
So long as suckers keep stepping up with new money he can keep on making those payments. Eventually it collapses.
spankingman said:
An Italian made a bowl of spaghetti a long time ago and charged everyone for the sauce saying he'll provide a return of Ragu instead and as everyone kept putting money into it, they received a tomato, instead of the Ragu, until it ballooned into one macaroni in the dish.
It wasn't exactly like that, but he was an Italian named Ponzi and he did what Madoff did. Except today, Madoff put it into Google, Google releases everything for free, claims billions in revenue, collapses the friggin world and the media is too scared to say that Google is a farce, while all the newspapers collapse at the same time. I mean, I wouldn't believe that too, but $50 BILLION farking dollars does not just create Dubai (a massive city in the middle of farking no where), someone has to funnel it somewhere......where else, Google, stock goes from $85 to $747 and they release everything for free and collapse the movie, music, newspaper, and television industry all at once, now it's $300.00. Great return on investment there.
Not as if Microsoft releases Windows and their upgrades for free. The evidence will show Madoff INVESTED in Google and never invested in Microsoft. Just sit back and stand by for it. Cash out Google, if you have any money there. Been saying that for years.
Gyaos Baltar.
I was watching CNN a couple of days ago.
1) This is scary but they are suggesting there are more Madoffs out there. (Remember that movie JAWS and someone asked if there was only one JAWS in all the whole wide oceans?)
2) Among Madoff's victims is the Russian mob and there might be a contract out on his life right now.
1) This is scary but they are suggesting there are more Madoffs out there. (Remember that movie JAWS and someone asked if there was only one JAWS in all the whole wide oceans?)
2) Among Madoff's victims is the Russian mob and there might be a contract out on his life right now.
the frauds are named after a guy named Ponzi back in the late 1800's or early 1900's in and around New York
landscaper said:
Yup, but the original Ponzi was more of a stand up guy than Madoff. Ponzi himself believed his business idea would work, and started paying people back their own money as dividends because he felt they were owed it and he believed that anyway he was going to make so much money that it wouldn't matter. Turned out his idea was a dud, and he kept on paying people their own money longer the should have.
fuji said:
Are you saying that Madoff was corrupt from the get go and not just an idea gone bad because of the bear market? If so, he was stupid for allegedly accepting money from the Russian mob who supposely now have a contract on his life.
Rockslinger said:
From what I've read his scheme was essentially a Ponzi scheme since sometime in the 1970's.
The real Ponzi was an out and out scammer, but at the outset he thought his postal reply business was legit. He had tried all kinds of other scams before and after the famous one so at some point he was really just pulling the wool over people's eyes.
All those chain letters where you send someone at the top of the letter $5 or whatever...those are Ponzi schemes. Most people have been offered something like this at one time or another.
An alleged recent one in Ontario involves raising pigeons. Not sure if any charges have been laid yet though..so to early to say with court approval that it is a ponzi scheme.
An alleged recent one in Ontario involves raising pigeons. Not sure if any charges have been laid yet though..so to early to say with court approval that it is a ponzi scheme.
This video does some 'splainin':
http://www.youtube.com/watch?v=zRTPKcJGwe4
Hmmm ... the "pyramid" scheme seems like a misnomer.
It seems more like a hub-and-spoke system.
http://www.youtube.com/watch?v=zRTPKcJGwe4
Hmmm ... the "pyramid" scheme seems like a misnomer.
It seems more like a hub-and-spoke system.
I don't understand.
What if an investor decides to cash out early?
In his mind, he is owed his original principal plus the "earnings" he has made.
If this happens too early (i.e. before the scheme has enough money), it stops right then and there, I guess.
I guess it is assumed that enough investors will move the scheme along and be blind to what is actually going on, that even if a few investors cash out, there is enough money in the scheme to pay them off.
What if an investor decides to cash out early?
In his mind, he is owed his original principal plus the "earnings" he has made.
If this happens too early (i.e. before the scheme has enough money), it stops right then and there, I guess.
I guess it is assumed that enough investors will move the scheme along and be blind to what is actually going on, that even if a few investors cash out, there is enough money in the scheme to pay them off.
ig-88 said:
The scammer happily pays him--with other people's money. That makes the scam look more legit, and builds confidence, and attracts other suckers: Now there's a satisfied customer out there gloating to his friends about the money he made, saying what a breeze it was to collect his money when he wanted it. A couple of his friends decide to invest... so long as more people are putting in new money than there are interest payments or withdrawls the scammer can live high on the hog on the difference.
Bingo. Madoff worked it up to $50 billion before it collapsed on him. The financial crisis scared too many of his clients into pulling out for reasons having nothing to do with him in particular, and he couldn't cover it.
A nice little grilling of the SEC...
"We know there are many other Madoffs out there, they're starting to surface."
http://www.youtube.com/watch?v=8PlLCKW4zuY
edit: Vollmer looks like some caricature of Dana Carvey. Looks somewhat creepy.
wow-o-wow, check out Related Videos as well lol
"We know there are many other Madoffs out there, they're starting to surface."
http://www.youtube.com/watch?v=8PlLCKW4zuY
edit: Vollmer looks like some caricature of Dana Carvey. Looks somewhat creepy.
wow-o-wow, check out Related Videos as well lol
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