In this article, Delena D Spann, thought leader and subject matter evangelist on the topics of fraud, white-collar crime and financial crime, reviews Ponzi schemes and their outcomes.
The economy has been in a see-saw recession, data breaches have been lurking in every major corporation, the news coverage of ISIS and ISIL have been daunting, the terrorist attack in Paris; and, of course, the fraudsters have continued to thrive in times of financial chaos. Thankfully, we are also seeing the increase of corporate financial felons paying their debts to society for the nefarious decisions that they’ve made.
We definitely had a great ending to 2015: corruption and Ponzi schemes. How is it that we, the richest country in the world, have allowed ourselves to be tangled in a web that obviously is the antithesis of how we see ourselves morally? The American hegemony has long been the pioneer spirit, strong in body and mind, hard-working, honest, compassionate and generous. However, when I look around at some of our corporate, political and religious leaders I wonder that the saying is true: “power corrupts”. The average American hasn’t exactly been behaving either. There’s a fair amount of greed out there, and few of us can say we haven’t participated in it to one degree or another.
So now, how do we get back to our American ideals? How do we get back on track? Why is there an epidemic of Ponzi schemes? The late millionaire, Charles Ponzi, a Boston scammer is the father of Ponzi Schemes. A Ponzi scheme often occurs when the schemer promises returns that are above the legal rate. The “red flag” is that the returns are simply too good to be true.
Ponzi schemes have two classifications which are primarily used in their promotions:
The duration of a Ponzi scheme depends on a few factors:
Let’s look at a few of the historical and recent Ponzi schemes and their outcomes:
It is a national disgrace to see investors and stockholders taken advantage of. Where did this unbridled greed come from? Our moral compasses have gone off course for sure. An article in the Sun Times on January 24, 2009, written by Rev. Robert Barron, summed the pervasiveness of this shameful state of affairs by comparing our current leaders (corporate and religious) to those of ancient times. 1 Samuel 30 is referenced in Rev. Barron’s article.
We don’t have a monarchy, but within these last few decades we have surely made CASH our king. Haven’t we experienced enough grief in pursuing monetary gain at all costs? Have we learned anything yet? As I am writing this, another Ponzi scheme has been unearthed: Martin Shkreli, hedge fund manager and former CEO of Turing Pharmaceutical has stepped down amid a seven count indictment where he is charged with conspiracy to commit securities fraud and wire fraud.
As we continue to see the increases of fraud and corruption I challenge each of us to conduct our due diligence in helping to secure our nation.
Case References:
Neal V Goyal, http://www.sec.gov/News/PressRelease/Detail/PressRelease/1370541933406
Paul Burks, http://www.sec.gov/News/PressRelease/Detail/PressRelease/1365171483920
Delena D Spann, thought leader and subject matter evangelist on the topics of fraud, white-collar crime and financial crime is employed by the United States Secret Service where she is assigned to the Electronic & Financial Crimes Task Force.
Spann is the author of Fraud Analytics: Strategies and Methods for Detection and Prevention, Wiley Publishers, October 2013.