Musings of a Magpie Mind: Ponzi gave his name to the scheme, others keep perfecting the scam

Beware...beware...the crooks and creeps out there!

Beware…beware…the crooks and creeps out there!

Nowadays most of us are virtually wedded to our computers and the many other clever devices that science has created. But all this devotion to new technology has spawned a sinister subculture, and the authorities warn us against it time and time again.

Yet obviously, if we want to enjoy the benefits of instant communication and the wonders of the Internet, we must accept the risks, because the systems we depend on have proved to be fallible and easily compromised. It’s sobering to realize that on the web, our individual privacy is always vulnerable to abuse. The hackers and bullies, the thieves and even predators are all out there, trying to get in.

In particular the global explosion in social media, which has fed our compulsion to chat to each other, plus our growing preference to make so many purchases electronically, have not only opened the door to a whole new world of retail marketers but also allowed a motley crew of crooks to sneak in behind them.

So it’s a very scary world out there, hidden behind our screens, a coven of cheats, liars and villains. Their sheer audacity is sometimes amusing, but they’re all deadly serious in their number one priority: to separate you and me from our hard-earned cash, with a variety of old and clever new scams.

We have learned to be vigilant. Lots of us have installed security software to help keep our systems safe, but even those firewalls are sometimes breached. We still read about the occasional successful con game that lasts long enough to relieve trusting folk of their savings.

Now, we all have a hankering for a bargain, and most of us would also admit to nursing a bigger dream — the joy of cashing in the winning ticket that delivers the million dollar jackpot. Money galore; enough to share with family and friends, enough to treat ourselves to luxury and a life unsullied by the need to earn a living.

I suppose the simplest route to achieving this windfall, but the least likely to pay out because of the fearsome odds, is the lottery ticket. It’s safe, inexpensive and gets us into the action. Our occasional flutter usually turns into a regular habit, and each time we part with our cash we can indulge in a little rosy speculation.

The search for wealth becomes a lot more exciting and perhaps more traumatic when we’re lured into an investment requiring a bigger commitment, particularly one that promises a sizeable and more immediate return for our dollars. We’re assured that the more we cough up, the bigger the payback. The visions of fat profits, the prospect of unusually high and regular interest payments, all backed by an earnest guarantee, are very persuasive. It’s easy to conclude that such an opportunity offers a more certain payout than the lowly lottery ticket.

Most of us though are sceptics and sensibly steer shy of these powerful pitches. But some don’t, either because they’re naive, or because the greed and avarice that’s buried in all human nature overrides their caution and judgement. Naturally the fraud merchants happily exploit such weakness.

Of course in the history of fiscal shenanigans, nothing matches the damage and the misery caused domestically and internationally by the predations of Wall Street banks and investment houses. But the dark recesses of stock transactions have spawned a number of criminal masterminds over the years, ever since the days of the South Sea Bubble. That scheme was a typical web of deceit, bribery and corruption, based partly on the sale of African slaves. It relieved England’s aristocracy and politicians of much money, way back in the 1720s.

Then, as now, a favoured few used illegal insider trading to reap early rewards. The rest lost out. This enormous financial disaster caused economic and personal chaos, but nowhere in the annals of thievery has there been a faster and easier way to separate cash from the gullible than the later Ponzi schemes.

Despite damning media coverage over the years, these frauds continue to pop up regularly to ensnare the public, particularly here in North America.

I did a little digging to find out where these scams had originated, and sure enough, discovered that they’re named after the clever crook who concocted the most famous one in the last century. Carlo Ponzi was an Italian immigrant to the U.S. and a con man to the core.

He first fell afoul of the law up in Canada and served three years in a Montreal jail. Subsequently deported, he was handed another stretch, this time in the Atlanta penitentiary. But around 1919 his twisted little brain told him that the old pyramid investment structure, which had actually been described in a couple of Charles Dickens’s novels, could open the door to lots of easy money.

Vigorously, from his shabby Boston office, he put the word out that an investment in his promissory notes could generate up to 50 per cent interest over just 90 days! The credulous crowds took notice and beat an eager path to his door. Soon he and his agents around town were raking in a million dollars a week. Most of the money ended up in Ponzi’s pocket.

It wasn’t long before a savvy financial journalist on the leading Boston newspaper challenged the scheme, suggesting that it was merely a way of paying out original contributors with money received from the flood of new investors. The newsman was promptly sued for libel by the affronted Ponzi. He lost the case and had to pay the little crook a handsome settlement.

But not long after, the whole racket unwound and collapsed, taking down six local banks with it. The hue and cry which followed produced a circus-like trial with victims overflowing into the street outside. The evidence was shattering, the verdict a foregone conclusion. When it was all over and the little culprit was shuffling out of the court in handcuffs and shackles, he turned to one of the officials standing there and whispered in his ear the old Roman motto: “Sic transit Gloria mundi”. (Thus passes the glory of the world). Ponzi always had an inflated opinion of himself, but perhaps his final comment should have contained a couple of different Latin words: “Caveat emptor”…. and shouted it out as a warning to the whole assembly. Such advice had been completely ignored by his get-rich-quick investors, who lost a total of $20 million in 1920 dollars, over a very short space of time.

And while flipping through the sorry history of villainous financial scammers who stole so much money and broke so many hearts, I unearthed details on the prince among Ponzi schemers, the most infamous, heartless con man EVER: Bernard Madoff. He is the biggest, baddest corporate crook in the history of the financial world.

In a 20 year period of sly manipulation which got up to speed in the late 1980s, he ripped off a colossal $65 billion U.S. from a client list that included entertainment and Hollywood celebrities, politicians and sports stars, big people and so many small ones, plus a miscellany of highly respected charities, foundations, universities, international banks and even investment firms.

Sadly, a whole lot of trusting folk in his closely-knit Jewish community, who had regarded him all this time as a benefactor and a role model of integrity for their culture, were badly betrayed, particularly those who ended up among his victims. Madoff was no respecter of colour or creed; money was his common denominator.

The diminutive crook later admitted at his lengthy trial, that had the SEC investigators done their job with any degree of competence, by checking his books in answer to the rumours that swirled around him, they could have put an end to his nefarious scheme, long before he did so much damage to so many people. The scandalous ineptitude of this government agency created a lot of embarrassment for many federal bureaucrats, all the way to the top.

In 2009, amid great jubilation in the media and much apprehension among his thousands of investors, the court pronounced sentence on the supposedly contrite little Bernie. To many it seemed a ridiculous, inadequate punishment, a strange quirky requirement of the American legal system. The greedy fraudster was handed a multiple life term of 150 years in a federal penitentiary, so that on paper at least, he’ll be due for release in 2139!

Naturally the authorities confiscated all his assets in the fond hope of paying back some of the loot to investors. They reluctantly left a mere 2.5 million bucks for his wife to live on, which was apparently quite a comedown from the luxury lifestyle to which she and her family had been accustomed. Today Madoff relaxes in jail and has admitted to visitors that he always enjoys being treated “like a Mafia Don” by the other prisoners.

He ruefully obsesses that his avarice and lack of conscience for so long has not only ruined his business and reputation, but has condemned every member of his family to the life of pariahs in the community that once idolized him. But I wonder if he ever spares a thought for anybody else, for those fellow citizens who lost a great deal more — their life savings, their homes and for many, their futures.

Today there are still shady characters in the stock markets, but most of the petty crooks now infest the web. Without constant vigilance in our Internet dealings, not only are our dollars at stake, so is the security of our credit cards and bank accounts. Even our very identities can be stolen. And while we appreciate that the computer is a universal blessing in so many ways, many people have discovered to their cost that it can also be a Pandora’s Box for the Carlo Ponzis of the world. So let’s keep that lid tightly closed.

(Bill Greenwell prospered in the ad agency arena for 40 years in the U.K. and Canada. He retains a passion for medieval history, marine paintings and piscatorial pursuits. His wife Patricia indulges him in these interests, but being a seasoned writer from a similar background, she has always deplored his weakness for alliteration. This has sadly had no effect on his writing style, whatsoever.)

Just Posted

A new laundromat is opening in the Peters Centre in Lake Cowichan. (file photo)
Peters Centre getting all cleaned up

Laundromat being developed at the Neva Road site

Robert's column
Robert Barron column: Skyrocketing house prices a tragedy

North Cowichan councillor Rosalie Sawrie brought an interesting perspective to a discussion… Continue reading

Soaker hoses laid down over corn seedlings, soon to be covered with mulch, will see to the watering needs of the bed through any summer drought. (Mary Lowther photo)
Mary Lowther column: Investing in soaker hoses is money well-spent

No-till gardening has a distinct advantage during drought

Karl McPherson, left, and Mary Morrice are the new head coach and general manager, respectively, at the Duncan Dynamics Gymnastics Club. (Kevin Rothbauer/Citizen)
Manager charts a new course for Duncan Dynamics

More recreational programs to join competitive teams

Cute but fierce! Timber moonlights as an attack kitty. (Sarah Simpson/Citizen)
Sarah Simpson Column: Beware of Mr. Bite, the midnight attacker

Last week, in the middle of the night, I was awoken by… Continue reading

At an outdoor drive-in convocation ceremony, Mount Royal University bestows an honorary Doctor of Laws on Blackfoot Elder and residential school survivor Clarence Wolfleg in Calgary on Tuesday, June 8, 2021. THE CANADIAN PRESS/Jeff McIntosh
‘You didn’t get the best of me’: Residential school survivor gets honorary doctorate

Clarence Wolfleg receives honorary doctorate from Mount Royal University, the highest honour the school gives out

The Great Ogopogo Bathtub Race has been held in Summerland as a fundraising event. Do you know which Canadian city introduced this sport? (Black Press file photo)
QUIZ: A summer’s day at the water

How much do you know about boats, lakes and water?

Two-year-old Ivy McLeod laughs while playing with Lucky the puppy outside their Chilliwack home on Thursday, June 10, 2021. (Jenna Hauck/ Chilliwack Progress)
VIDEO: B.C. family finds ‘perfect’ puppy with limb difference for 2-year-old Ivy

Ivy has special bond with Lucky the puppy who was also born with limb difference

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

A million-dollar ticket was sold to an individual in Vernon from the Lotto Max draw Friday, June 11, 2021. (Photo courtesy of BCLC)
Lottery ticket worth $1 million sold in Vernon

One lucky individual holds one of 20 tickets worth $1 million from Friday’s Lotto Max draw

“65 years, I’ve carried the stories in my mind and live it every day,” says Jack Kruger. (Athena Bonneau)
‘Maybe this time they will listen’: Survivor shares stories from B.C. residential school

Jack Kruger, living in Syilx territory, wasn’t surprised by news of 215 children’s remains found on the grounds of the former Kamloops Indian Residential School

A logging truck carries its load down the Elaho Valley near in Squamish, B.C. in this file photo. THE CANADIAN PRESS/Chuck Stoody
Squamish Nation calls for old-growth logging moratorium in its territory

The nation says 44% of old-growth forests in its 6,900-square kilometre territory are protected while the rest remain at risk

Flowers and cards are left at a makeshift memorial at a monument outside the former Kamloops Indian Residential School to honour the 215 children whose remains are believed to have been discovered buried near the city in Kamloops, B.C., on Monday, May 31, 2021. THE CANADIAN PRESS/Darryl Dyck
‘Pick a Sunday:’ Indigenous leaders ask Catholics to stay home, push for apology

Indigenous leaders are calling on Catholics to stand in solidarity with residential school survivors by not attending church services

Most Read