5 ms·

Ponzi scheme work because people believe the fraud (promise of high returns). If they said, deposit your money and we'll pay you back only if enough people aft

Ponzi scheme work because people believe the fraud (promise of high returns). If they said, deposit your money and we'll pay you back only if enough people after you also deposit their money then you'd have an interesting point, although I'm sure it's still illegal even if you announce your intentions before doing something illegal.

conanbatt 9y ago
> Ponzi scheme work because people believe the fraud (promise of high returns). Lotteries work the same way and are legal.
- haimez 9y ago
  Lotteries are also illegal to operate privately, which makes them completely irrelevant to this conversation.
  - Sean1708 9y ago
    > Lotteries are also illegal to operate privately I didn't know that. Does that mean that raffles are technically illegal? Or is there some kind of special-case about winning money?
    - amdavidson 9y ago
      Raffles guarantee a winner. Picking a single person from a group of people have a very different probability profile than picking a number from a set of numbers that may not have associated lottery tickets.
    - Nursie 9y ago
      In the UK there are special rules about raffles and lotteries on a small scale, and apparently they are only legal when for "a good cause" - http://www.gamblingcommission.gov.uk/for-the-public/Fundraising-and-promotions/Fundraising-and-promotions.aspx http://www.gamblingcommission.gov.uk/for-the-public/Fundrais...
    - tialaramex 9y ago
      In different places (states, countries) there are a variety of rules, the goal of which is generally to let people have things like a fun Xmas raffle without opening up the opportunity to run "The Numbers Game" or similar. To allow a raffle, dodges often enshrined in law include: * Very low prize limits (e.g. max $100) but donated prizes don't count towards that limit. So your local charitable raffle has no problem getting a nice bottle of Scotch, dinner for two with wine at a nice place, family portrait, whatever local merchants want to donate, and it's all fine, so long as they don't buy it. * Exemptions if you can only buy tickets in one place, or if you only sell them to members of your organisation that exists for some other purpose (e.g. a local church, employees at a factory) * Exemptions if the profits of the gambling go to a recognised charitable organisation. * Exemptions if there's no profit at all, all is spent on prizes that go to ticket buyers randomly, so the whole operation only moves money around randomly inside a group of participants.
- beefield 9y ago
  My understanding is that lotteries are quite open about the expected return that is heavily negative (and most people do understand that the expected return is negative). So they do not work the same way.
  - conanbatt 9y ago
    Even if you are open to being a Ponzi, it is illegal in the U.S. As another user says, the only legal Lottery is the one that is run by the State. Isn't it interesting.
skgoa 9y ago
With Ponzi schemes the situation is even wrose for the perpetrator: they are explicitely illegal and you can't get out of legal ramifications even if you are completely honest and upfront.
saas_co_de 9y ago
> Ponzi scheme work because people believe the fraud That is not always the case. Sometimes you have a Ponzi like Madoff where it may seem legit to investors but most ponzis are blatant and the people involved know it is a ponzi but think they can profit by selling it to greater fools. Of course they will all express shock and feign ignorance when they are trying to get their money back or defend themselves from the angry people they hustled.
- mannykannot 9y ago
  In the US, as the Madoff case showed, if it can be shown that you are a sophisticated enough investor to realize that it is probably a Ponzi scheme, your profits can be clawed back and used as partial restitution for the victims. Any scheme that is upfront about what it was doing would significantly lower the bar on making that case.
  - sseveran 9y ago
    In fact this is the case even if you are not a sophisticated investor, since the profits are not yours and are really just stolen property.

conanbatt 9y ago

> Ponzi scheme work because people believe the fraud (promise of high returns). Lotteries work the same way and are legal.

haimez 9y ago
Lotteries are also illegal to operate privately, which makes them completely irrelevant to this conversation.
- Sean1708 9y ago
  > Lotteries are also illegal to operate privately I didn't know that. Does that mean that raffles are technically illegal? Or is there some kind of special-case about winning money?
  - amdavidson 9y ago
    Raffles guarantee a winner. Picking a single person from a group of people have a very different probability profile than picking a number from a set of numbers that may not have associated lottery tickets.
  - Nursie 9y ago
    In the UK there are special rules about raffles and lotteries on a small scale, and apparently they are only legal when for "a good cause" - http://www.gamblingcommission.gov.uk/for-the-public/Fundraising-and-promotions/Fundraising-and-promotions.aspx http://www.gamblingcommission.gov.uk/for-the-public/Fundrais...
  - tialaramex 9y ago
    In different places (states, countries) there are a variety of rules, the goal of which is generally to let people have things like a fun Xmas raffle without opening up the opportunity to run "The Numbers Game" or similar. To allow a raffle, dodges often enshrined in law include: * Very low prize limits (e.g. max $100) but donated prizes don't count towards that limit. So your local charitable raffle has no problem getting a nice bottle of Scotch, dinner for two with wine at a nice place, family portrait, whatever local merchants want to donate, and it's all fine, so long as they don't buy it. * Exemptions if you can only buy tickets in one place, or if you only sell them to members of your organisation that exists for some other purpose (e.g. a local church, employees at a factory) * Exemptions if the profits of the gambling go to a recognised charitable organisation. * Exemptions if there's no profit at all, all is spent on prizes that go to ticket buyers randomly, so the whole operation only moves money around randomly inside a group of participants.
beefield 9y ago
My understanding is that lotteries are quite open about the expected return that is heavily negative (and most people do understand that the expected return is negative). So they do not work the same way.
- conanbatt 9y ago
  Even if you are open to being a Ponzi, it is illegal in the U.S. As another user says, the only legal Lottery is the one that is run by the State. Isn't it interesting.

skgoa 9y ago

With Ponzi schemes the situation is even wrose for the perpetrator: they are explicitely illegal and you can't get out of legal ramifications even if you are completely honest and upfront.

saas_co_de 9y ago

> Ponzi scheme work because people believe the fraud That is not always the case. Sometimes you have a Ponzi like Madoff where it may seem legit to investors but most ponzis are blatant and the people involved know it is a ponzi but think they can profit by selling it to greater fools. Of course they will all express shock and feign ignorance when they are trying to get their money back or defend themselves from the angry people they hustled.

mannykannot 9y ago
In the US, as the Madoff case showed, if it can be shown that you are a sophisticated enough investor to realize that it is probably a Ponzi scheme, your profits can be clawed back and used as partial restitution for the victims. Any scheme that is upfront about what it was doing would significantly lower the bar on making that case.
- sseveran 9y ago
  In fact this is the case even if you are not a sophisticated investor, since the profits are not yours and are really just stolen property.