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Old 07-04-2009, 11:56 AM   #1
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The Con Artist Hall of Infamy

Con Artist Hall of Infamy

The originator:

THE CON: Charles Ponzi promised to double investors' money in three months with postal coupons, which he’d buy from a country with weak currency and redeem for twice as much in dollars. But there were no coupons – only the funds from new investors, which he used to pay off the earlier ones.

THE DAMAGE: $8 million, or about $100 million today

THE OUTCOME: Despite attempts to escape on a steamer ship and convince the president to extradite him to Italy, Ponzi served seven years in prison. His name became shorthand for the classic “robbing Peter to pay Paul” scheme.
Tools of a Con Artist

Whether he draws on his innate character, or earned and practiced authority, a con artist uses every angle to convince people of his integrity and his financial prowess.

Con artists draw on a variety of strengths, including:

Power & Influence: When he talks, people listen. He has a position of power and friends in high places. He exudes an aura of success; whatever he touches, it seems to turn to gold.

Charisma: He appeals to a broad swath of people. He makes people feel clever and charmed; he plants the seeds of his con with such cunning, his victims think they’ve come up with the idea themselves.

Strong Cover: He seems almost incapable of wrongdoing. His cover might be his solid reputation and the loans he’s secured from big banks and investment firms. Or it might be a persona he adopts: a pious member of the community or a gifted, but naive, businessman.

Climate for a Con

The con artist sees and exploits individuals’ vulnerabilities. Likewise, he taps into points of weakness in his environment.

A ripe climate for a con is one that includes some or all of the following:

A booming stock market: When stock prices are high, con artists will do anything to keep them up and to profit from the buzz on Wall Street.

Optimistic and/or inexperienced investors: A spirit of risk-taking often accompanies a booming market. Investors – including those with little experience – are ready to jump in and make a fortune.

Regulatory loopholes: A good con seems plausible – and has multiple layers of plausible complexity. Cons flourish when they can fly under the weakened or ineffective radar of the Securities and Exchange Commission.
Collapse of a Con

The life span of a con depends on a number of factors; if a con artist can attain a limited notoriety – in which his scheme is being talked about but hasn’t created a loud enough buzz to attract real scrutiny – he can enjoy a profitable run. If he can maintain tight control over his company books and board, he can fix numbers to his heart’s content.

Of course, a con is bound to collapse. Built on a foundation of lies, it grows shakier and more difficult to maintain with each passing year. It requires ever more complicated maneuvers to hide the hollow base and keep the money flowing.

Cons are almost certain to fail with the addition of either of the following:

Economic downturn: When the stock market crashes, investors become cautious. They start to pay close attention to where they put their money. If enough investors are worried, and sell stock or withdraw funds, the con combusts in a matter of days.

Persistent reporter: All it takes is a simple question: How does his moneymaking scheme work? Once a good reporter has asked that question, and started to follow the convoluted money trail, the end is near for a con artist.
Obvious new inclusion:

THE CON: With his stellar reputation and cozy relationship with regulators, Bernard Madoff had an excellent cover. He also had a steady stream of cash from hedge funds, individual investors and foundations eager to reap double-digit returns. Then the market crashed, exposing his $65 billion Ponzi scheme.

THE DAMAGE: The $65 billion scam bankrupted thousands of individual investors. Several charities folded and countless lives and fortunes were ruined.

THE OUTCOME: Six months after his arrest, Madoff - who pleaded guilty - received the maximum sentence of 150 years in prison. To date, $1.25 billion has recovered from his assets and 8,800 individuals have filed claims for restitution.
Outcome of a Con

Hundreds, even thousands, of investors are left with empty retirement and savings accounts. Hard-working people lose their jobs as companies fold under the strain of a crooked CEO. Banks and investment firms are drained of millions. The impact of a con is felt even beyond those at the center of the scheme. New legislation may be introduced to fill a regulatory gap, but con artists will continue to find ways to profit on a lie.

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Old 07-04-2009, 12:50 PM   #2
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Wow, great site. Thanks for this!!

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Old 07-04-2009, 04:12 PM   #3
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If some people can avoid EARNING money and just plain steal it they will try.
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