50 Billion dollar losses in one Ponzi Scheme

I was the victim of someone running a fake investment company... maybe someday i'll tell about it.

And you're right, the trust and credibility factor was huge.

I read about that. Unbelievable.

Josh,

You know the amount of money in that deal is shocking as hell too, 50 billion. Unreal.

To put this in perspective... the amount of money he scammed the investors and institutions out of are more than the entire auto industry is asking for in their bailout.

The story reports that he only has a fraction of 1 billion left out of the 50 billion dollars scammed.

And we as US taxpayers are bailing out wall street which is rife with unscrupulous people like this man who was the Chairman of one of the worlds leading stock markets the NASDAQ stock exchange?

Why do I have the feeling this is only the tip of the iceberg?

The largest Ponzi Scheme in history is still active today. It's called Social Securtiy...

I'm still p.o.d at the fact that after we bailed out the snls the one blew
all that money on that junket the very next day.

You guys remember 12 daily pro? That was a micro version of what this guy did, but screwed a bunch of people. Buddy of mine lost 15k in that!

It happens more than we think. What's the difference between Madoff and Enron or Worldcom? Same thing just different name. I unfortunately worked for a company who's owner years ago did it and blew up the company and is in jail. Putting close to 3,000 out of work.
It all comes down to greed.

I'm a victim of some sort of "ponzi scheme" too.
The good thing is that I NEVER had to spend any money because it's FREE
The bad thing is that,I wasted my time by convincing 6 people to join me.

There are no 'investors' in the Social Security ponzi scheme. You HAVE to 'contribute'.

CT

Ok I conceed....

Now this thread truly has become pointless... if it had any point to begin with :p

Leading up to Christmas is when Ponzi's thrive. Everyone is looking for that easy dollar. I hope that your sister ends up okay Elliot.

Unfortunately an online ponzi was one of my first online experiences. Not a pleasant one!

Matt

No, I don't think this thread is pointless. Clearly this person was able to get away with it for so long because of trust and credibility.

The same thing could easily happen in IM if one big name guru decides to pull off a huge scam with a fraudulent launch. The lesson here is to carry out due diligence on your purchases however credible the seller is.

Derek

There IS a point to this thread and that is...learn from human nature. It's behavioral economics in action.
If a man can bilk $50 Billion from people, I'm sure there are a few lessons for us as well.

In general, government is how we tackle issues that are too large for anyone but "all of us together" to deal with. Funding the army, the police, the fire department, universities and so on. Each society has different ideas for what's included under "and so on" - rather more than most in my home nation of Norway, rather less than yours in the US. They're all workable on their own terms and they're all accidents of history - more or less. In my view, government's proper role is to facilitate the greatest possible individual liberty, mostly by providing a stable currency and legal framework for business, build and maintain infrastructure and otherwise staying out of people's lives where possible. But roads still have to be maintained, business functions better when all potential employees have a shared school background and minimum education level, it's cheaper to run a health care system with single-payer than the mess they've made of things in the US, and so on.

Though I suppose a theoretical discussion of models of government and legitimacy is kinda off topic and belongs further down.

However - research without immediate or intermediate monetization prospects is interesting for its own sake, but it's not the function of business to invest in fundamental research without the prospect of a ROI. If Robert Kahn and Vince Cerf had developed TCP/IP under contract to IBM instead of DARPA - presuming of course, that IBM would even have funded a competitor to their SNA - you'd have been paying IBM by the minute for connection time over their network. If Tim Berners-Lee had been under contract to British Telecom instead of CERN when he developed the first web browser, do you think it would have been released into the wild for free?

Lucky for us that they did, though.

(Monetizing or commercialization of fundamental research is a whole different kettle of fish, that's exactly the job of private enterprise and explains why I'm paying a private company for my Internet connection, several different ones for hosting and so on. Or why it's Pfizer's job to develop promising research from Oxford into viable drugs. Or why Vegas Vince's version of "Kinsey: the Movie" would be a lot more interesting than the Kinsey report itself...)

Warren Buffet has some views I find interesting - so do some other folks, but there's more than one way to look at it and Vahan Janjigian has some issues with Buffet.

I dunno though - government legitimacy arises from the consent of the governed and what is legitimate by popular consent is very, very variable. And sometimes not grounded in reality - the Soviet Union had popular consent for a while but communism doesn't actually work however much the lefties want it to because human nature just doesn't work that way.

And these investors all thought that their popular consensus that this was a good investment could substitute for due diligence, just like the autosurf ponzi people did - "As long as we all agree to pretend that this is legit, it can work" seems to be the prevailing notion.

I actually heard about this in the news a few days ago and it pretty much shocked me to see this.

Tal

There is another extremely important issue, it concerns the safety of your investments with your stock broker or bank.

If you buy a property, you have to do this through a lawyer who will go through and verify tons of legal documents to make sure that everything is alright. The deeds to the property often contains a huge pile of legal documents.

However, if you buy stocks, bonds or mutual funds through your broker or bank. Quite often they act as nominees and you do not receive any documents at all verifying that you actually own those investments. Nevermind that the value of your investmnets often exceed the value of your property investments. The only document that you would have signed is one that allows them to act as your nominee. This document is usually signed on your own without a lawyer going through it.

Derek

The question everyone is how did someone who is supposed to be an expert lose $50 billion, where did it go?