Looking at both sides of the ponzi coin, on the face of it, ponzi schemes are hard to resist. Whether you are creating a ponzi scheme or participating in one, a pervasive feeling of omnipotence and endless possibilities will whip interested parties’ imagination into a frenzy. Why?
Your first reaction to a ponzi scheme proposal would be to think it is amazing, very clever and foolproof. On second thought, almost too good to be true. If you have been requested directly or indirectly to be discreet, that everybody will want in on it and that you have to decide right now, chances are you are embarking on a ponzi scheme.
Charles Ponzi was an Italian immigrant who discovered around 1920 that he could more than double his money by buying European International Postal Reply Coupons and swap these for American Post stamps, which he sold for cash. It was perfectly true and legal and it would have worked very nicely, had he not lost himself in his omnipotence frenzy.
The next thing he did was to shop around for funds.
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Looking at Ponzi’s mugshot, one could easily imagine a Holywood producer considering George Clooney to play the lead role of a biographic film on the man’s life. He had looks, charm, deceptively friendly eyes and charisma, some key ingredients one needs to create a bond of instant trust with other people.
As always with easy money, greed was lurking around the corner. Ponzi quickly found people willing to lend him funds because he promised returns of 50% within 45 days. Word of mouth did the rest and it only took a couple of months for him to start reaping millions of dollars.
He was reckless from the start, not even bothering to keep books. A couple of false alarms should have confronted him with reality, but he kept everyone happy by paying his creditors with fresh incoming money until the day someone betrayed his scheme, which is when authorities jailed him.
These days ponzi schemes are a dime a dozen and the strategy still works like a charm. Hardly a week passes by without some or other story of a conviction involving a ponzi scheme being reported by the press. On the Internet, one of the more notorious would be the one involving AdSurfDaily - incorporated in Florida - from which 93 million dollars were seized by the state.
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