Happy birthday to Charles Ponzi, the man credited with being the first to exploit the simple scam that has come to be known as a Ponzi scheme.  Ponzi was born in 1882 which means had he not died in 1949, he would have been 132 years old today.  To put this in perspective, if Ponzi schemer, Bernie Madoff started serving his prison sentence 132 years ago, he would still have 18 years left on his sentence of 150 years.  Ponzi was a good example to generations of scammers including, in recent years, Bernie Madoff, R. Allen Stanford, Tom Petters, Scott Rothstein and Marc Drier, to name just a few.  Unfortunately although scam artists, the only criminals we refer to as artists have learned from Charles Ponzi, many of us in the public have not paid enough attention to the lessons of Charles Ponzi and we continue to be cheated and scammed by people following Ponzi’s plan.  At its core, Ponzi’s plan involves a  seemingly complex investment that returns steady and lucrative returns.  Generally the investments are touted as being both safe and high paying.  Unfortunately, the only one who is getting highly paid is the criminal masterminds behind these scams.  Generally there are no investments, as was the situation with Madoff.  The records provided to investors are phony and the money paid back to investors is derived from the funds constantly being added to the scheme by new investors.


Bernie Madoff had the temerity to blame his own victims for their losses when he recently said that investors should have investigated his investment strategy before investing with him and that had they done so, they would have been able to see that it was a scam.  The truth is, however, that no one should ever invest in any type of investment that they do not fully understand.  Madoff’s professed theory at the time he was raking in funds appeared so complex that many intelligent investors ignored the fact that they did not understand what was going on and instead merely looked at his consistent rates of return and just blindly trusted him.  This was a big mistake.  Investors with R. Allen Stanford may have been blinded by their greed when they invested in his off-shore CDs that somehow were able to return interest rates 4% higher than CDs from American banks.  Neglecting to do proper research into these investments cost Stanford’s victims dearly.  You can learn more details about how to recognize Ponzi schemes and what steps you can take to protect yourself from investment scams in my book “The Truth About Avoiding Scams” which can be obtained through Amazon by clicking on the link on the right hand side of this page, however two essential rules are that you should never invest in any investment that you do not truly understand and you should always be skeptical when an investment appears too good to be true.