Author: James Walsh
ISBN: 1563431696:
Publisher: Silver Lake Publishing In 1903 Charles Ponzi arrived in the USA with the aim of becoming as wealthy as Rockefeller. His modus operandi was based on the principle of robbing Peter to Pay Paul. James Walsh, in his informative book, You Can`t Cheat An Honest Man: How Ponzi Schemes and Pyramid Frauds Work..and Why They`re More Common Than Ever, traces the origins of the Ponzi Scheme, and explores how and why the scheme works with its different modern day variations. The first part of the book narrates how, after spending some time in prison for cheque forgery, Ponzi found a creative way to shaft people, that was even legal and possibly sound. What Ponzi would do was to take advantage of the disparities in the foreign exchange rates pertaining to the postal currency of International Reply coupons. If these coupons could be purchased in countries where they were still hit hard by the after-effects of World War I, he could then redeem them for stamps or cash in the USA, where there value would be as much as 50% higher. Presto! He was onto a brilliant scheme, however, he needed money to expand his enterprise. In order to raise the needed cash, he promised investors that he would pay them high rates of interest with the profits from his scheme. As is the case today, people were gullible and greedy, and Ponzi had little difficulty in attracting huge sums of money. However, Ponzi found it difficult to keep meeting his obligations of paying his investors. He resorted to using fresh money to keep his original investors satisfied. And thus began the Ponzi Scheme, that is alive and well today with multiple variations on the original theme. One such variation is the very popular pyramid sales scheme, where individuals are seduced to become part of a plan for the sale or distribution of goods, services or other property, and wherein they acquire the opportunity to receive monetary compensation, which has little to do with the volume or quantity of goods or services sold but rather on the number of additional persons that could be recruited to join the plan. The author devotes considerable print to these schemes, as well as making reference to the abundance of jurisprudence that defines and outlaws these plans. Anyone wishing to protect himself or herself, would do well in thoroughly reading the concluding chapter. It is here where we are given some very sound advice- to be wary of get rich schemes, watch out for deals that offer high yields, if you do not understand the investment, stay away from it, seek professional advice before investing in anything and check out who are the promoters. Walsh has a sharp eye as to important details, and with his wide use of informative examples, readers receive a comprehensive understanding as to just how wide spread these fraudulent schemes are and how not to be seduced by them. |
