The Ponzi scheme puzzle : a history and analysis of con artists and victims

Responsibility Tamar Frankel. Imprint New York : Oxford University Press, c2012. Physical description xvii, 231 p. ; 22 cm.

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Description

Creators/Contributors

Author/Creator Frankel, Tamar.

Contents/Summary

• PREFACE
• INTRODUCTION
• CHAPTER 1 CON ARTISTS AT WORK
• A. Three Stories of Ponzi Schemers
• 1. Charles Ponzi
• 2. Bernard Madoff
• 3. Gregory Bell
• B. The Basic Design
• 1. Drawing attention to the offer
• a. High Returns At No Risk
• b. Stories to Satisfy Investors' Curiosity
• c. Con Artists' Stories Are Exceptional and Creative.
• C. Gaining Trust and Concealing the Truth
• 1. Words Can Be Used to Signal Trust
• a. Words Can Denote Trustworthiness
• b. Signals to raise Trustworthiness
• c. It Depends On How You Say False Things. Specific Promises with Vague Roles
• d. The Way a Story Is Told Can Signal Truthfulness
• e. Refusing to Provide the Details of a Scheme Need Not Undermine Trust
• 2. Familiar Transaction Businesses and Forms Seem to Make Verification Superfluous
• 3. Hiding Fraud by Actions. Prompt Payments That Spell Trustworthiness, Low Risk, and Much More
• D. Hiding the Vulnerable Part of the Story: Secrecy and Costly Verification
• 1. Concealing the True Nature of the Ponzi Business
• 2. The Use of Justified Secrecy
• 3. Stories That Are Costly to Verify
• 4. Details That Hide the Truth by Drowning It
• a. Details Can Hide the Truth
• b. Complexity Helps Hide the Truth As Well
• E. Con Artists Deceptive Friendship, and Seeming Vulnerability by Age and Naivety
• 1. Deceptive Friendship and Love
• 2. Deceptive Weakness of Age and Seeming Naivety
• a. Old Age Can Deceive
• b. Naivety Can Deceive
• CHAPTER 2: SELLING THE STORIES
• A. Advertising
• 1. The Importance of Advertising
• 2. Where To Operate And How To Build a Reputation
• 3. Show Generosity
• 4. Entertain
• 5. Draw Attention by Engaging in Attention Drawing Conflicts
• B. Recruiting Helpers
• 1. Cooperation, Competition and Congregation Among Con Artists
• 2. Birds of a Feather Flock Together
• C. How Do Con Artists Approach Their Victims?
• 1. From Family and Friends to Institutions to Affinity Groups
• a. Introduction
• b. Affinity Groups: Ethnic and Religious Groups
• c. Religious Institutions
• d. Hybrid Institutions And Overtones
• 2. Technology Has a Growing Impact On The Growth Of Ponzi Schemes
• D. The Sales Force
• 1. Collecting and Distributing Information
• 2. Paid Sales Force
• 3. A Pure Sales Structure: Pyramid Schemes
• CHAPTER 3 CON ARTISTS' BEHAVIOR SEEMS A "
• A. Humans Have a Natural Ability To Pretend, Lie, And Influence Others
• 1. Humans And Even Primates Have Innate Abilities To Lie Convincingly
• 2. Signs Of Misleading Signals
• 3. Legitimate Lying
• 4. Exploiting The Weakness Of The Social System
• 5. The Slippery Slope: From Honesty To Fraud
• 6. Ponzi Schemes " Mirror Respectability
• a. Legitimate Businesses: Banking and Financial institutions
• b. Stock Market Trading-Following The Trends
• c. Salespersons And Traders
• d. Entrepreneurs
• e. Con Artists Are Believable: They Believe in Their Activities And View Them As Businesses
• f. Longevity of the Businesses Breeds Respectability
• CHAPTER 4 A PROFILE OF THE CON ARTISTS AND THEIR VICTIMS
• A. The Dark Side Of Con Artists (And Some of Their Investors)
• 1. Con Artists Are Different From Most People
• 2. On Very Rare Occasions A Con Artist Might Resort To Murder
• 3. On Very Rare Occasions A Group Of Con Artists Can Be Deadly As Well
• 4. Con Artists Lack Empathy
• a. What Does Empathy Mean?
• b. Lacking Empathy Can Bring Repeat Frauds
• c. Lacking Empathy Can Render Con Artists More Effective
• d. People's Empathy Is Socially Important
• 5. How Do Con Artists Present Themselves?
• a. Protecting the Weak Ego: We Are Special!
• 6. Con artists' mechanisms of ego protection and justifications
• a. Denial
• b. Blaming The Government
• c. Blaming The Laws
• d. Blaming The Victims
• e. Blaming Others, But Avoiding A Show Of Weakness
• f. Our Actions Are Justified. Others Are Fraudulent, And We Must Protect Ourselves Against Them By Defrauding First-- Besides, Everyone Does It
• g. Our Good Works Testify To The Legitimacy of Our Actions
• B. The Profile Of The Victims. What Kind of Persons Are the Sophisticated Victims? What Makes Some People More Vulnerable to Ponzi Schemes Than Others?
• 1. The Dark Side of Some Investors: Lacking Empathy Toward Other Investors And Shared Greed
• 2. Investors In Ponzi Schemes, Who Suspect Or Know The Nature Of The " Yet Invest.
• 3. The Element of Greed
• 4. What Drives the Victims?
• a. Gullibility
• b. Risk-Tolerance may cover tolerance to the risk of being caught for illegal activities
• c. An optimistic nature and outlook on life affects risk tolerance
• d. Social Status
• e. The role of education in risk tolerance is unclear
• f. A Reminder of the Stories in Chapter 1: The Ways Con Artists Make Their Offers
• 5. The Dark Side of Some Investors and Their Representatives: Lack of Empathy Towards Other Investors and Shared Greed
• a. Investors in Ponzi schemes, who suspect or know the nature of the " yet invest in it, do not demonstrate empathy with their fellow investors
• b. How do sophisticated victims of Ponzi schemes view themselves?
• 6. How Do Some Victims React To the Discovery of Con Artists by the Government?
• a. The victims' attitude towards the government
• b. The nature of a Ponzi scheme justifies this view of some investors
• D. The Issue of Addiction. Ponzi Schemes Are Addictive For Con Artists And For Some of Their Victims. The Slippery Slope to Addiction and Illegality
• 1. What Is Addiction?
• 2. What Causes An Insatiable Craving For More, And A Loss Of Self-Control?
• 3. What Are Con Artists and Perhaps Their Victims Usually Addicted To?
• 4. Con Artists Are Repeat Offenders
• CHAPTER 5. HOW DOES THE PUBLIC VIEW THE CON ARTISTS AND THE VICTIMS?
• A. America Is Ambivalent About Its Con Artists
• 1. Con Artists That Defrauded Small Investors Are Viewed Somewhat Differently
• 2. When Con Artists Mimic The Power Elite, They Are Close To, And Live Like, The Very Wealthy And Politically Powerful
• 3. The " The Benefits of Creative Harm
• 4. Con Artists Can Be Corrupting Teachers
• B. How does the Public View the Victims?
• 1. With Few Exceptions, People View The Victims Of Con Artists Differently Than They View The Victims Of Violent Crimes
• 2. A Related Reason For Condemning The Victims Is That They Did Not Do Their Homework.
• C. Are There Available Protections For Sophisticated Potential Victims?
• 1. Red flag: a very high return-low risk.
• 2. Red flag: The mystery source of the higher returns.
• 3. Red flag: Continuous offerings of obligations
• 4. Red flag: Con artists' activities outside the legal protections
• 5. Other red flag signals
• 6. Separating Business, Emotion, And Faith
• 7. Advice To Investors As Protection Against Affinity Scams Is Similar
• CHAPTER 6. THE LEGAL AFTERMATH
• A. Collecting the Assets and Mediating Among the Victims
• B. The Issues Error!
• C. Who Collects the Remaining Assets?
• D. Who, Among the " of Con Artists, Must Pay?
• 1. Who Helps The Con Artists?
• 2. What About Suspecting Helpers?
• E. How To Divide the Remaining Assets?
• F. Are All Victims Equal? They Are Not
• 1. Distinguishing between initial investment and profits
• 2. Markets and stolen goods: Policy issues
• 3. What about victims that " and decided to withdraw their money after collecting the profits?
• EPILOGUE.
• (source: Nielsen Book Data)