What Exactly is a PONZI SCHEME; etc?


By Dr. David E. Marcinko MBA CMP®

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SPONSOR: http://www.CertifiedMedicalPlanner.org

A Ponzi scheme (/ˈpɒnzi/, Italian: [ˈpontsi]) is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors. Recall Bernie Madoff.

More: https://medicalexecutivepost.com/2010/06/04/the-madoff-circle/

The scheme leads victims to believe that profits are coming from legitimate business activity (e.g., product sales or successful investments), and they remain unaware that other investors are the source of funds. A Ponzi scheme can maintain the illusion of a sustainable business as long as new investors contribute new funds, and as long as most of the investors do not demand full repayment and still believe in the non-existent assets they are purported to own.

Link: https://en.wikipedia.org/wiki/Ponzi_scheme

A pyramid scheme is a business model that recruits members via a promise of payments or services for enrolling others into the scheme, rather than supplying investments or sale of products. As recruiting multiplies, recruiting becomes quickly impossible, and most members are unable to profit; as such, pyramid schemes are unsustainable and often illegal.

CITE: https://www.r2library.com/Resource/Title/0826102549


How to Spot and Protect Yourself From Investment Fraud

Pyramid schemes have existed for at least a century in different guises. Some multi-level marketing plans have been classified as pyramid schemes.

And, there are MANY other schemes in the financial services sector.

MORE: https://www.msn.com/en-us/money/other/are-you-about-to-be-the-victim-of-a-ponzi-scheme/ar-BB1cqabu?li=BBnb7Kz

Front Running: https://medicalexecutivepost.com/2018/02/06/what-is-front-running/

Churning: https://medicalexecutivepost.com/2021/07/23/churning-front-running-and-pumping-dumping/



Thank You

MEDICAL RISK MANAGEMENT: https://www.routledge.com/Risk-Management-Liability-Insurance-and-Asset-Protection-Strategies-for/Marcinko-Hetico/p/book/9781498725989


On Financial Sector Failings

Understanding the Debacle

[By Staff Reporters]56371606

Did you know that Michael Lewis and David Einhorn recently gave a nice review of the financial system catastrophe, and its devastating flaws, causes and effects, in the January 3rd 2009 New York Times?

Exposing the Flaws

In review of How to Repair a Broken Financial World, they said:

1. Wall Street CEOs won’t self-incriminate or blow the whistle on their own companies [Think: thin-blue line]. And, they receive bonuses and are on peer-compensation committees. Perhaps they might even be fired if they self-accuse of irresponsibility.

2. The credit-rating agencies, which are supposed to carefully measure the amount of risk that companies take, dropped the ball.

For example Fannie, Freddie, GE and AIG all had triple-A ratings; remember Enron? But, they disguised the risk, rather than expose it. Why? Because they would have to re-rate tens of thousands of credits tied to them, as well as increase their own cost-of-capital; integrity and reputations be damned! And, did the big financial firms contribute to those very same credit-rating agencies [pay-2-play]?

3. Was Chris Cox and the Securities and Exchange Commission [SEC] competent enough, or motivated enough, to do its job and investigate the Madoff scheme even after being warned about it?


Can you cite some other, even more pernicious, flaws? For example; how did the mortgage industry’s engorgement of commission-driven sales, and the consumer sentiment to “own a home – at all costs” factor into the fault-line?   

Link: http://www.nytimes.com/2009/01/04/opinion/04lewiseinhornb.html?_r=1


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