What does Ponzi scheme mean? Can the money be recovered? Case introduction.

Everyone wants to have a chance to get rich. This mentality is easy to be deceived, and it is not surprising that many tricks can make many people go bankrupt, so don't fantasize about getting rich overnight without any effort. I wonder if you have heard of Ponzi scheme? What does Ponzi scheme mean? Since it is a scam, it is definitely illegal. Who will come into contact with this, and can the cheated money be recovered? What are the incidents of Ponzi scheme? Ming Zihui introduces relevant information for everyone. Welcome to reading.

Many people first heard the word "Ponzi scheme" in 2008. This year, the fraud of Bernard Madoff, the former chairman of Nasdaq, was exposed. It is said that he directed "the biggest Ponzi scheme in history" in the American real estate bubble.

Ponzi scheme generally rises with the economic bubble and breaks through when the bubble bursts. Of course, if you can't do it, the price is to spend the rest of your life behind bars.

What is a Ponzi scheme? For example, you just opened an account last week, and one day you boasted to your friends that you had discovered the "unique secret recipe" for investment, with an annual income of at least 20% and no loss. Friends will definitely ask you how you did it. You can make up a story for them, but refuse to disclose the details, on the grounds that "you are afraid that others will follow suit and lead to a decline in the yield." In view of your good reputation in the industry, many people trust you and let you take care of their funds. In the first year, you raised 1 ten thousand.

It's the end of the year again, and now you need to pay 20% interest to your customers, but you have no so-called "investment income" at all. How much are you willing to pay? Don't worry, in the second year, many new investors joined in, and you successfully absorbed 5 million principal. Can't you take out 200 thousand from this principal and pay it to the old investors in the first year?

The third year has arrived. Because previous clients have successfully obtained "benefits" (although I don't know that these benefits come from the principal of new clients), your credibility in the investment community is getting higher and higher, and more and more people join your camp. Now you have 10000000000 principal in your account! Take out 700,000 of them to pay the income of the previous customers (1 200,000 a year, 500,000 the next year), and then continue to play this game.

This is "Ponzi scheme", a kind of "empty-handed white wolf" trick that does not need foreign investment, but constantly uses the principal of new members to pay the income of old members. This is a pyramid accumulation scam. In order to give old members a "return on investment", we must constantly strive for new members to join; With the gradual increase of the total number of members, the total return required is getting higher and higher, which requires more members to join ... One day, when the inflow of members can't keep up with the return on investment, the scam will go bankrupt.

Figure: Ponzi cumulative scam pyramid

Many people think that the initiator of Ponzi scheme is an Italian American immigrant named Charles Ponzi, but this statement is not accurate. Ponzi scheme can be said to have existed since the birth of the financial industry, and Ponzi only carried it forward. To commemorate his greatness, this scam was named after him.

This scam was invented by a speculator named Charles Ponzi. Charles Ponzi, an Italian-born speculator, lived in 19 and 20th centuries and immigrated to the United States in 1903.

19 19, he began to plot. These swindlers invested in a non-existent enterprise, promising investors a 40% profit return within three months. Then, the cunning Ponzi paid the new investor's money as quick money to the original investor to induce more people to fall for it. Ponzi successfully attracted 30,000 investors within 7 months due to the rich returns of the early investors. This conspiracy lasted for a year, and only those who were carried away by interests woke up, and later it was called "Ponzi scheme".

Compared with ordinary financial fraud, Ponzi scheme has more victims, wider influence, deeper harm, stronger concealment and greater social harm.

First, there are many victims.

The inherent pyramid-shaped investor structure of Ponzi scheme and the pyramid-selling method of cheating and wooing the offline determine that the victims must reach a certain scale in order to effectively maintain the cash flow required by the scheme. Therefore, there are often countless typical victims of Ponzi schemes. For example, Ponzi cheated 40,000 investors that year, and the victims of Colombian pyramid schemes characterized by illegal fund-raising reached 2 million. The number of people cheated in the recent Madoff case is hard to count. In addition to the United States, Madoff fraud has spread to Britain, France, Switzerland, Spain, Japan and other countries.

Second, the amount of fraud is huge.

The initiators of Ponzi scheme never thought about repaying the investment principal, so they never worried that the amount involved was too large, and scammers thought that increasing the amount of funds raised would help to enhance their popularity and attract more investors to participate. Therefore, under the accumulation of snowball effect, the amount involved in Ponzi scheme is often higher than that of general financial fraud. For example, Ponzi fraud150,000 dollars, illegal fund-raising case in Colombia involving 800 million dollars, Madoff case reaching an unprecedented 60 billion dollars.

Third, the social influence is wide and has many levels.

The number and scale of Ponzi scheme determine that its social influence far exceeds that of ordinary fraud cases. Its influence level is diversified, including government officials and celebrities, financial investment practitioners, ordinary people and retirees with low risk tolerance, which has caused serious social harm. If it is not handled properly, it is likely to endanger financial stability and social order because of public opinion. For example, pyramid schemes in Colombia have caused large-scale riots in some areas.

The fourth is to endanger investment confidence and financial stability.

In view of the influence and harmfulness of Ponzi scheme, confidence in investors is fatal. After every Ponzi scheme, it always takes a long time to repair the damaged financial order, and it is even more difficult to restore investors' investment confidence overnight. Taking Madoff's fraud case as an example, a large number of financial institutions were involved, which led to the customers of financial institutions losing trust in financial institutions, triggering a large-scale chain lawsuit and adding new injuries to Wall Street, which has been hit hard by the financial tsunami.

Fifth, deception is deceptive and hidden, and it is difficult to supervise and trace.

Brilliant Ponzi schemes mostly use obscure investment methods, which make the way of making money plausible and feasible, supplemented by stable excess returns, and can effectively deceive ordinary investors and even professional investors. The insiders of Ponzi scheme often master the core information of the group, cronyism and strictly keep the financial secrets of the group, thus reducing the risk of being exposed or investigated by the outside world. For example, Madoff's asset management department and trading department work on different floors. Madoff kept the company's financial situation secret, even for his children and relatives who were company executives. All the accounts and documents of investment consulting business were locked in the safe by Madoff. Lack of transparency and various deception means that Ponzi schemes can often last for a long time outside the vision of regulators.

Ponzi scheme is an illegal and criminal act. After being cheated, the victim can report to the public security organ for help. After receiving the alarm, the public security organs will investigate and deal with the perpetrators of Ponzi scheme, and once the criminal facts are established, they will be transferred to the procuratorial organs for examination and prosecution. However, once cheated, it is very difficult to recover the money. Don't take any chances, thinking that a liar will have a conscience to pay back the money without calling the police. After all, a liar won't lie to you if he really has a conscience.