Could be any size scheme, from big to little, or variety. Could be something you think is a ponzi scheme that has yet to burst.
I think Herbalife or any kind of MLM is still crazy. Just that people are lurked in thinking they can sell some junk products and become rich.
| +29 | SpaceX IPO - what are your thoughts | 5 | 3h |
| +25 | Should I use Claude or chatgpt? | 12 | 2h |
| +21 | Funny Things to Say to Interns | 6 | 3d |
| +17 | London's future as a financial centre | 18 | 20h |
| +16 | How did you meet your significant other/partner? | 13 | 24m |
| +9 | Top 5 Artificial Intelligence Software Development Companies | 0 | 14h |
| +9 | Study in Europe and How to Pay Tuition Fees in Europe | 1 | 14h |
| The Great Debate | 8 | 54m | |
| +7 | E ink/electronic notepads | 4 | 58m |
| +7 | Ferrari Luce | 7 | 2d |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
Hot take: BLM
Not trying to get political...but yea crazy how that ended up. Basically the "founder" (?) just took all the money and bought a house. (I always think its somewhat funny how other groups of people tried to start similar causes as well and they fell flat). I just think it shows that if you get people emotional enough you can get money.
If you are just talking about the literal BLM organization, is that really that hot of a take? If you removed the nouns and you just describe the behavior that was done, there would be generally agreement regarding how scammy the organization is
I don't think you understand what a Ponzi scheme is
How is BLM a Ponzi? A Ponzi scheme is where an investor promises high returns, but uses money from new investors to pay off the original ones.
BLM misusing their funds is fraud, but not a Ponzi scheme, because they were not promising any return on investment. A Ponzi scheme is a very specific type of fraud.
Charles Ponzi's
$RUN
Honestly, Maddoffs is still crazy to me, just how there was a whole floor propping the entire thing up on old scantron printers, and it was legit run by former bookies. It's actually kind of impressive.
Agreed on the MLM, the only difference is a couple of companies, there are a couple of people that make a killing, so it's like a Ponzi scheme setting up tons of Mini Ponzi schemes.
Finally, life Insurance feels like it if you work at one, I know there is a need and reason, but just crazy.
My favorite part about Madoff's scheme is that he had a legitimate market making operation that was one of the largest in the country and was the precursor to Jane Street, Citadel Securities, etc. It was completely separate from his Ponzi scheme and helped bolster his standing in the world of finance.
Its total scum, but I always thought the business model of these different IG-based crypto/RE/drop ship courses could be really good.
Gross margins are really high, fixed costs for your sales force seems non-existent since its all commissioned 'affiliates'. I would guess the churn is enormous after a certain point and the PPC/ad spend is high to get going.
Any sleazy WSO members know the econs on things like this?
I'm always confused by these, mainly because myself I never click on these. Same with any kind of advertising on social media. But the companies I sure do their research, and some people have to clicking/buying.
It’s mostly for people not literate in finance. I see kids from my HS who are in trade school or never went to college eating these courses up
MMM in 90s Russia. A guy in his late 20s makes a company and pushes the idea among uneducated communist people and freshly entered into capitalism that stonks only go up. People go crazy after his company and he issues as many shares as possible. The Ministry of Finance puts a cap on his share issuance (he wanted to issue 1 billion shares), and he circunvents it by introducing a sort of tickets that looked like cash (with his face on them) that were valued at 1/100 of the value of the existing shares. To not document those transactions, they were handed as "souvernis after you made a donation to him".
The price of both shares and tickets were based on self-quotation, meaning he decided at what price those were traded, and this was done each Tuesday and Thursday of the week. There was no market for those. One day he went publicly and said that from now on shares wouldn't double each week, but would go x4, making him $50mn. in just one day.
The Government wanted to step in, but people (defrauded investors) were making so much money (what they tought) that they made a mass riot. They even voted for the guy to become a politician to grant him immunity, and Mavrodi became a politician in the Russian Parliament. He even had support to go for the role of Russian President, but obviously there were more influential people than him so he got removed from the list.
He eventually declared the company bankrupt. 50 people commited suicide on the announcement and other 15 million were victims (est. fraud of $70-80bn., higher than Madoff's $20bn., but sources vary). Nowadays, 1/5 of Russians don't support capital markets/financial markets because of this historical experience.
So basically you have a guy that built a sort of stock market in Russia, becoming the 12th wealthest businessman in the country and also a Russian politician - all of this in 5 years. The best thing and why I Iike this story is that all of this happened from this shitty apartment:
also funny that he was going in adidas tracksuit at Court hearings lmao (photo link)
Thank you for sharing this. I read up more on this, and one thing I found hilarious was that unlike other Ponzi schemes, many of the participants in this one understood that it was a fraud, they just wanted to not be the one left holding the bag at the end
exactly seemed like they were following the private equity playbook
The biggest one in human history is an easy pick for this one - Social Security.
Agreed. It's crazy how this was just started as an essential safety net, but now its all some people have. So because people didn't plan properly, if we try to change it its a big issue. Now we haven't changed it for so long, that any change is magnified. The math also doesn't work now like it use to (less people paying in per people getting payments.) Average age of death used to be ~64, so even if you made it SS payments you did pretty good. Really we need to scale it so the age you receive payments goes up over time, but that will probably never happen.
Typical conservative. Not only do you not understand what a Ponzi scheme is, you don't understand how Social Security works, but you won't bother to let little things like facts or definitions get in the way of a good rant against the government.
Social Security isn't a Ponzi scheme, because you don't invest an asset. Social Security is no different than a Treasury bond or any other form of debt security, which not surprisingly is what makes up the entire "asset" side of the balance sheet for the Federal Old Age and Survivors Insurance Trust Fund. The liabilities of Social Security are the estimated payouts it has to make, and it's only real asset is the ability of the government to levy taxes to make those payments.
That is the basic definition of any other form of long term debt. But that isn't as convenient for whatever insipid political point you want to make. If you buy a long dated Treasury bill you get nothing in return for it except a general obligation of the government to levy taxes to repay you.
Wait, what you just described is a ponzi. Not even a conservative here
From recent history, Bitcoin and other crypto, Gamestop
Neither of those are Ponzi schemes
they are. people buy them because they think they can sell them to someone else higher because of the hype and without any regard for fundamental value.
Maybe not the craziest but Zadeh Kicks is/was an interesting one to follow especially if you knew the space
I vaguely remember this, basically a guy took money for shoes and couldn't deliver the shoes right?
Somewhat reminds me of that guy Marc Lore, he started Diapers.com, ran it at a loss, but eventually operated long enough to sell it to Amazon for a profit, which then folded after Amazon owned it. Then he did the same thing with Jet.com to Walmart, now he's trying to build Wonder. He's definitely made money and played the game the best, but he hasn't build sustainable companies.
"lurked in thinking"
You mean "lured into thinking"?
America is little more than a ponzi scheme at this point
NXIVM
Watch it on American Greed.
https://en.m.wikipedia.org/wiki/NXIVM
An MD at PJT was running a Ponzi scheme. Andrew Caspersen. Wild story.
Social Security?
You give money, that money is used to pay other people, there is not enough to pay you back
Nah, that's a misunderstanding of how social security works. Is unsecured corporate debt a Ponzi scheme? My guess is most people would say no.
The ignorance on this thread, of both what a Ponzi scheme is (not directed at you, Shervin) and especially what Social Security is, is pretty depressing.
It is litterally the definition of a ponzi scheme. The only difference is that the government allows it. People like to pretend it isn't because the government, by force, takes money from you to pay Paul.
Madoff is still the wildest for me, just the scale and how long he kept it hidden. But yeah, beyond the classic Ponzi setups, it’s worth remembering there are other types of fraud that hit just as hard, like procurement fraud in government contracts. Saw an article on the National Law Review about government procurement fraud and it’s crazy how similar some of the tactics look compared to financial schemes, just aimed at taxpayers instead of investors.
One of my friend's aunt worked there for ~15 or so years. Career never recovered after it all blew up, had to retire early. His father left finance too in the 2000s, apparently he knew some of the folks who died at Cantor in 2001 too.
I guess the Great Financial Crisis was the tipping point for the family to get out of finance. Friend and all his siblings ended up going into clinical healthcare careers as their father refused to fund their education if they pursued finance / business / Wall Street etc.
No one on this thread seems to understand what a Ponzi scheme is, which is both unsurprising but also disturbing for a finance website.
MLMs are not Ponzi schemes. They are frauds. Those two things are not the same; a Ponzi scheme is a type of fraud.
The correct answer to this question isn't even up for debate: Bayou Hedge Fund Group. Not so much because of the Ponzi scheme itself (which is the same as every other Ponzi scheme) but because of the story of how it imploded.
Sam Israel basically thought he was Jason Bourne. And that the end game was a prime bank instrument fraud, something so easily spotted that it's amazing anyone who has set foot on Wall Street can be taken in, but there you go.
Private equity. Just passes 95% shit overvalued companies around like a hot potato!
Beat me to it. GPs clip 2% fees f**k the performance of the fund
The one bernie madoff pull off
Saepe nihil molestias velit et in. Sunt et dolorem dolor ducimus dolorem nihil dolor. Ut nihil magnam laboriosam sequi necessitatibus doloremque perspiciatis. Tempora nemo iusto minus. Qui sit labore pariatur enim cupiditate. Et eos nostrum dolorem fugiat voluptatem laborum excepturi.
Omnis aut qui ex autem quam facilis. Quos nostrum sed numquam quod voluptas ut qui quibusdam. Reiciendis velit fuga quidem et quidem quod nostrum. Deserunt dolor quisquam sapiente nobis. Alias ducimus dolor aliquid.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Illum facere sunt error saepe esse asperiores aut. Eum dolorum similique aut omnis.
Blanditiis sapiente quis blanditiis officiis et ut dolorum. Et iste qui asperiores laborum quia optio. Nesciunt impedit nesciunt dignissimos et est ducimus natus.
Eaque expedita in error tempora. Nihil molestiae labore ab modi dignissimos atque eos. Ipsum ab qui nemo consequatur repudiandae voluptatem. At autem eius sapiente est fugiat.
Vel error quia delectus. Et possimus cupiditate necessitatibus nihil impedit minima soluta.
Provident quisquam et adipisci minima tempora laborum. Velit quae aut vel. Pariatur eos aut voluptatem ipsa repellendus. Et iusto et sequi quibusdam dignissimos voluptatem.
Corporis illo aliquid qui fugit et asperiores. Accusamus doloremque eaque harum voluptatibus. Corporis quia tenetur sit necessitatibus qui quis consequatur. Et quae consectetur id. Enim quaerat dignissimos omnis quisquam in.
Qui et vitae perferendis quam architecto consectetur doloremque ex. Earum odio consequuntur voluptas incidunt. Aut qui et ducimus eum quaerat aut optio. Sunt et tempore dolorem ut eveniet corrupti sed.