6 ms·

It amazes me that in the year 2021 there are still Ponzi schemes being pulled off like this.

by throwkeep 5y ago

duxup 5y ago
The fact that they happen seems rooted in human nature. I'm not sure of anything that will stop that.
huitzitziltzin 5y ago
Expect to continue being amazed in 2041 when they still work and in exactly the same way.
- smachiz 5y ago
  There's a sucker born every minute.
  - TedDoesntTalk 5y ago
    Not all of these people are suckers. Some are in neurological decline due to age (not necessarily dementia). Point is, don't always criticize the victim. Sure, there are some victims who should have known better. But not all.
    - jmcqk6 5y ago
      Whether a person should have known better or not doesn't change the fact that these bad people shouldn't be doing these bad things. I don't know why or how it got fashionable to dismiss someone having something terrible done to them by saying "they should have known better" but every single time it's bullshit. I have a feeling it's a thought terminating cliche to help out of the state where you know something terrible happened to this person, and there is nothing you can do about it.
      - TedDoesntTalk 5y ago
        How does that relate at all to my comment? I think you replied to the wrong thread?
mimixco 5y ago
There will always be Ponzis because it works on the greed of the mark. Wanting unrealistic returns and impossible profits makes people ok with the "rest of your story," even if it's all BS. The mark just has to believe he'll profit at those crazy levels.
- nicklecompte 5y ago
  Madoff’s scheme wasn’t based entirely of the greed of his clients (though that was certainly a major factor): a lot of it was the Myth of Financial Genius that surrounded Madoff and an excessively credulous financial media which didn’t investigate a hedge fund that in retrospect was clearly cooking the books. The pension funds who lost money weren’t trying to juice their pensions, they thought their money was safe with someone of Madoff’s pedigree. Understandable ignorance explains many victims of financial crimes. In this case and in Madoff’s it seems to be basically okay people who had no idea they were dealing with a scheming sociopath. No need to judge their character.
  - mimixco 5y ago
    A good point.
ska 5y ago
It would amaze me if there wasn't; grifts and scams are part of human nature - ponzi schemes are an obvious one wherever you have investment.
fireeyed 5y ago
Why does this amaze you ? More than half of Startups are Ponzi schemes played over a longer time horizon and more artfully. They start with a product or service that barely generate profit in the real world, polish it up with Pitch Decks, sell the idea to investors who then sell the idea to other investors and on and on the scheme goes until they IPO it if it goes that far. The banks get ahead of it and eventually the retail investor and 401k are usually left holding the bag.
- fractionalhare 5y ago
  That's not a Ponzi scheme, and you diminish the fraud of real Ponzi schemes by equating them with a frothy venture capital market. Very few startups deliberately commit fraud by paying out old investors with new investors. Just because seed and Series A round investors can liquidate earlier doesn't mean it's a fraudulent operation.
  - stealthy123 5y ago
    Former fraudster here. It's a stealth ponzi scheme. An advanced ponzi scheme should not look like what it was centuries ago. A ponzi scheme can be polymorphic and stealth. It's like saying you are not a human because you're not white. Ponzi can have same structure and look legit perhaps play longer. Edit: Wow my texts are flagged. Strange!!
    - fractionalhare 5y ago
      I don't really care if you're a former fraudster or not. I am still outright rejecting the claim that the venture capital industry is engaged in, or equivalent to, a systematic Ponzi scheme. If you want to critique it, fine, but don't commit an abuse of terminology. At this point I've worked for, worked with or invested in over 50 different VC-backed startups. I have been brought in to see their code and the internals of their products. Yeah sure some opportunistic sociopaths like to raise stupid seed rounds on a fugazzi pitch deck. And the industry is frothy with fundraising. But you can't categorically classify the industry as fraudulent. There exist many varieties of high risk investments with a long time horizon which are not fraudulent. Everyone knows what they're getting into. Cases like Theranos are not the norm, which is why they received outsized attention when they're uncovered.
natchy 5y ago
If schemes were regulated out of existence, then eventually there would be a huge population of gullible suckers who won’t recognize a Ponzi scheme. Much like how most American don’t barter anymore for little things so they’re easy pickings at a car dealership. Or if everybody quits drinking alcohol, you’ll know less people who’ve had liver failure, causing next generation to not know the risks, etc
- antasvara 5y ago
  That's a really interesting concept, but I think somewhat flawed. The purpose of regulating schemes out of existence is so that there's a smaller chance of them existing. Even if that decreases one's ability to discover these schemes, it should (theoretically) more than even out with the decreased chance of investing in a Ponzi scheme. I liken it to online shopping. Online shopping today is much more trustworthy than 15 years ago. Improvements in technology and more name brand companies using the internet has led to an increase in trust levels for shopping today versus in the early 2000's. This does make us more likely to be scammed, but the fact that it is now harder to scam someone online has (I would assume) decreased the percentage of people making fraudulent purchases.
  - jandrese 5y ago
    > I liken it to online shopping. Online shopping today is much more trustworthy than 15 years ago. I'm not sure this is the case. I find it harder to avoid scams these days because some of the sites I used to trust went out of business because they couldn't compete with Amazon. But now Amazon is full of nearly impossible to spot fakes and sellers who flat out lie, and their system makes it hard to track who is who.
    - TedDoesntTalk 5y ago
      More and more, I go to the manufacturer's website and buy directly from them. If I'm buying a printed book, I use abebooks.com. Trying to do my part to support the Amazon competition. I still buy from Amazon, but not as much as a year ago.
throwaway98797 5y ago
optimistist get their comeuppance
prostoalex 5y ago
I am amazed at the scale. On HN you read about a hustle some startup had to undergo to raise a $1 million seed, and here a second-rate actor https://www.imdb.com/name/nm4878976/ https://www.imdb.com/name/nm4878976/ has access to $690 million?
tootahe45 5y ago
In 2020-1 we've seen people making 100%+ returns on ridiculous investments everywhere, so i can see how certain people are falling for to-good-to-be-true schemes.

It amazes me that in the year 2021 there are still Ponzi schemes being pulled off like this.

duxup 5y ago

The fact that they happen seems rooted in human nature. I'm not sure of anything that will stop that.

huitzitziltzin 5y ago

Expect to continue being amazed in 2041 when they still work and in exactly the same way.

smachiz 5y ago
There's a sucker born every minute.
- TedDoesntTalk 5y ago
  Not all of these people are suckers. Some are in neurological decline due to age (not necessarily dementia). Point is, don't always criticize the victim. Sure, there are some victims who should have known better. But not all.
  - jmcqk6 5y ago
    Whether a person should have known better or not doesn't change the fact that these bad people shouldn't be doing these bad things. I don't know why or how it got fashionable to dismiss someone having something terrible done to them by saying "they should have known better" but every single time it's bullshit. I have a feeling it's a thought terminating cliche to help out of the state where you know something terrible happened to this person, and there is nothing you can do about it.
    - TedDoesntTalk 5y ago
      How does that relate at all to my comment? I think you replied to the wrong thread?

mimixco 5y ago

There will always be Ponzis because it works on the greed of the mark. Wanting unrealistic returns and impossible profits makes people ok with the "rest of your story," even if it's all BS. The mark just has to believe he'll profit at those crazy levels.

nicklecompte 5y ago
Madoff’s scheme wasn’t based entirely of the greed of his clients (though that was certainly a major factor): a lot of it was the Myth of Financial Genius that surrounded Madoff and an excessively credulous financial media which didn’t investigate a hedge fund that in retrospect was clearly cooking the books. The pension funds who lost money weren’t trying to juice their pensions, they thought their money was safe with someone of Madoff’s pedigree. Understandable ignorance explains many victims of financial crimes. In this case and in Madoff’s it seems to be basically okay people who had no idea they were dealing with a scheming sociopath. No need to judge their character.
- mimixco 5y ago
  A good point.

ska 5y ago

It would amaze me if there wasn't; grifts and scams are part of human nature - ponzi schemes are an obvious one wherever you have investment.

fireeyed 5y ago

Why does this amaze you ? More than half of Startups are Ponzi schemes played over a longer time horizon and more artfully. They start with a product or service that barely generate profit in the real world, polish it up with Pitch Decks, sell the idea to investors who then sell the idea to other investors and on and on the scheme goes until they IPO it if it goes that far. The banks get ahead of it and eventually the retail investor and 401k are usually left holding the bag.

fractionalhare 5y ago
That's not a Ponzi scheme, and you diminish the fraud of real Ponzi schemes by equating them with a frothy venture capital market. Very few startups deliberately commit fraud by paying out old investors with new investors. Just because seed and Series A round investors can liquidate earlier doesn't mean it's a fraudulent operation.
- stealthy123 5y ago
  Former fraudster here. It's a stealth ponzi scheme. An advanced ponzi scheme should not look like what it was centuries ago. A ponzi scheme can be polymorphic and stealth. It's like saying you are not a human because you're not white. Ponzi can have same structure and look legit perhaps play longer. Edit: Wow my texts are flagged. Strange!!
  - fractionalhare 5y ago
    I don't really care if you're a former fraudster or not. I am still outright rejecting the claim that the venture capital industry is engaged in, or equivalent to, a systematic Ponzi scheme. If you want to critique it, fine, but don't commit an abuse of terminology. At this point I've worked for, worked with or invested in over 50 different VC-backed startups. I have been brought in to see their code and the internals of their products. Yeah sure some opportunistic sociopaths like to raise stupid seed rounds on a fugazzi pitch deck. And the industry is frothy with fundraising. But you can't categorically classify the industry as fraudulent. There exist many varieties of high risk investments with a long time horizon which are not fraudulent. Everyone knows what they're getting into. Cases like Theranos are not the norm, which is why they received outsized attention when they're uncovered.

natchy 5y ago

If schemes were regulated out of existence, then eventually there would be a huge population of gullible suckers who won’t recognize a Ponzi scheme. Much like how most American don’t barter anymore for little things so they’re easy pickings at a car dealership. Or if everybody quits drinking alcohol, you’ll know less people who’ve had liver failure, causing next generation to not know the risks, etc

antasvara 5y ago
That's a really interesting concept, but I think somewhat flawed. The purpose of regulating schemes out of existence is so that there's a smaller chance of them existing. Even if that decreases one's ability to discover these schemes, it should (theoretically) more than even out with the decreased chance of investing in a Ponzi scheme. I liken it to online shopping. Online shopping today is much more trustworthy than 15 years ago. Improvements in technology and more name brand companies using the internet has led to an increase in trust levels for shopping today versus in the early 2000's. This does make us more likely to be scammed, but the fact that it is now harder to scam someone online has (I would assume) decreased the percentage of people making fraudulent purchases.
- jandrese 5y ago
  > I liken it to online shopping. Online shopping today is much more trustworthy than 15 years ago. I'm not sure this is the case. I find it harder to avoid scams these days because some of the sites I used to trust went out of business because they couldn't compete with Amazon. But now Amazon is full of nearly impossible to spot fakes and sellers who flat out lie, and their system makes it hard to track who is who.
  - TedDoesntTalk 5y ago
    More and more, I go to the manufacturer's website and buy directly from them. If I'm buying a printed book, I use abebooks.com. Trying to do my part to support the Amazon competition. I still buy from Amazon, but not as much as a year ago.

throwaway98797 5y ago

optimistist get their comeuppance

prostoalex 5y ago

I am amazed at the scale. On HN you read about a hustle some startup had to undergo to raise a $1 million seed, and here a second-rate actor https://www.imdb.com/name/nm4878976/ https://www.imdb.com/name/nm4878976/ has access to $690 million?

tootahe45 5y ago

In 2020-1 we've seen people making 100%+ returns on ridiculous investments everywhere, so i can see how certain people are falling for to-good-to-be-true schemes.