Brothers in the Scheme Family – and Why Network Marketing is No Relation
Had Charles Ponzi and Bernie Madoff switched birthdates, Ponzi would likely have been sentenced to luxury apartment arrest for perpetrating a “Madoff Scheme”. Indeed, Ponzi bilked investors out of a mere $15 million back in the 1920s (about $154 million in today’s dollars), and even managed to pay a good chunk of it back. Madoff madeoff with about $50 billion – that’s with a B – in literally today’s dollars! This makes Mr. Madoff Guinness eligible for the world record as largest Ponzi Scheme in history – well, until around 2016. That’s when something called Social Security will officially meet the definition.¹
The guy² who popularized the pyramid scheme was probably named “Ogg” (yes, with two g’s) and drew his circles on a cave wall.
Although doomed at birth by the same disease, called mathematitus, pyramid and Ponzi schemes are in fact a very different organism.
A Ponzi scheme differs from a pyramid in two primary ways. First, a Ponzi usually has a single administrator (perpetrator) who acts as the hub for all transactions. A pyramid scheme is usually initiated by someone, but then he initiates others to perform the same recruitment process. Eventually everyone in the scheme not only invests into it but does so with at least the intention of enticing others to invest as well. A Ponzi has one prep and many victims. A pyramid has many perps and many victims, and most participants are both.
Read the rest of the article by Len Clements HERE.
