A Ponzi scheme as defined by the US Securities and Exchange Commission is “an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Organisers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk. In many Ponzi schemes, the fraudsters focus on attracting new money to make promised payments to existing investors and to cover personal expenses, instead of engaging in any legitimate investment activity”.
These schemes utilise a host of ploys to enlist members into the program though tried and tested techniques. You’ve seen it before: the glittering generalities, testimonials, card stacking, and jump on the bandwagon ploys? You know, the ones promising that you can “work from home”, “make up to 10,000 USD or more per month”, “be your own boss”, etc. Well people still fall for these swindles on a daily basis – hook, line and sinker.
Why are many fooled by these clichéd techniques? Because they appeal to emotions rather than reason. These statements, and the aggressive recruiting seminars that follow, aim to make recruits believe what they would not normally accept if they were given the time to calmly and dispassionately think about these bogus claims.
I once knew a man who lost his entire life’s savings one such Ponzi scheme. Let’s call him Ziad. Ziad was a well-bred and educated man in his early 40s and wore an aura of sharpness, charm and charisma. Married to a beautiful wife and with two gorgeous children, Ziad had spent the greater part of his working life in Saudi Arabia where he had amassed a small fortune due to his honesty, hard work and greatly sought after technical and managerial skills.
In short, he was, using commonly held benchmarks, living the perfect life. That was until he flew to Dubai on business where for some unknown reason he was lured into a then ongoing Ponzi scheme called Biznas. Ziad quit his job, cashed in on his severance package, withdrew his savings and flew back to Dubai to pay an innumerable sum to Biznas to own the “right” to be the first to set up a Pyramid shop in Lebanon. In his defence, Ziad really thought everyone he hoped to recruit would benefit as he reaped in the millions.
From what was left of his savings, he rented a plush office, furnished it with only the best money could buy, installed computers, hired staff and spent day and night trying to recruit new blood. Lady Luck was not on his side; he fell flat. I remember dropping by to his office with a mutual friend to say, ‘Hi’, just before he closed up shop: the sparkle in his eye was gone, the burning flame of ambition was extinguished and it was obvious, he was a broken man.
Wherever you are today, Ziad, I hope you are back on your feet again, and if so, just remember to be wary of Greeks bearing gifts.
