Chapter One: a quick overview of what a Ponzi scheme is, along with a hypothetical example.
Chapter Two: what is and what is not a Ponzi scheme. Pyramid schemes are not Ponzi schemes. A bubble is not a Ponzie scheme. Robbing Peter to pay Paul is not a Ponzi scheme.
Chapter Three: 520 Percent Miller. William Miller opened for business in 1899, in the city of New York. He called his company the Franklin Syndicate. Miller was called “520 percent Miller” because he promised 10% interest per week on any money invested with his company. He defrauded investors out of $1 million (in 1899 dollars). After he was caught, Miller spent ten years in prison.
Chapter Four: Between 1991 and 1994, a Romanian named Ioan Stoica ran a company called Caritas. Caritas promised investors 800% interest on their investment. A fantastic pledge, which was made even more fantastic by the promise that it would happen in six months. No one thought it was too good to be true. Over 400,000 people invested a total of $1 billion (US dollars). When Caritas went under, it owed $450 million. Stoica was given 7 years in prison for fraud. But his gall knew no limits. He appealed and the sentence was reduced to 2 years. Then he appealed that sentence. In the end, he received a sentence of 18 months in prison. He pocketed $550 million.
Chapter Five: MMM was a Russian company that started right after the USSR fell apart in 1991. Two million people invested $1.5 billion in MMM. When it finally collapsed, the guy responsible for the whole thing was arrested and charged with fraud. He bribed the officials and got off with only 4.5 years in jail. He kept most of the money.
Chapter Six: Gerald Payne started a church in Tampa, Florida. He called the church Greater Ministries International. Payne was a ‘prosperity theologian.’ He promised church members they would double their money. And cited Scripture to support his claims. 18,000 church members were bilked out of$500 million dollars. Payne went to prison, but the money was never found. Payne claimed he “lost it.”
Chapter Seven: John G. Bennett started a matching gifts program in Pennsylvania. He called it the Foundation for New Era Philanthropy. 1,100 donors ‘invested’ over $500 million, including the Red Cross. Bennett got away with $135 million.
Chapter Eight: Patrick Bennett ran a company called the Bennett Funding Group. The company supposedly invested in equipment leases and promissory notes. BFG got lots of people to invest more than $300 million. Only when the SEC filed a civil action against BFG did it come to a stop. Patrick Bennett walked away with untold millions.
Chapter Nine: Reed Slatkin, who was a Scientology minister, presented himself as a licensed investment advisor. He was not. 500 investors, most of who were Hollywood celebrities, handed him $600 million.
Chapter Ten: Lou Pearlman, who was a famous boy-band mogul, bilked investors out of $317 million. He told investors all their money was insured by the FDIC. It wasn’t. Pearlman actually got banks to provide him with loans for business projects he had going. They didn’t exist. He used the banks’ money to pay back his original investors, who then re-invested in his scheme. He did this for 12 years without being caught. His trial just took place.
Chapter Eleven: Charles Madoff.
Chapter Twelve: Charles Ponzi went from being a nobody to being a famous Boston millionaire in just six months. Ponzi’s company made its money by buying and selling international postal reply coupons. Of course, that was a lie. The company never bought or sold any coupons. Ponzi guaranteed 50% return in 45 days on investments. And a ‘double your money’ return in 90 days. 40,000 people invested 15 million dollars. Ponzi walked away with 10 million dollars.