Episode Details

Some believe Ponzi schemes are doomed to fail. But with a sophisticated schemer and a broad enough base of people, they might just be able to keep it going. In honor of Charles Ponzi's birthday, we talk about the history of the Ponzi scheme and some of the amazing stories of how they've been exposed and ways to see them coming.

Today's guest is Steve Weisman. Steve is a nationally recognized expert in scams and identity theft as well as a lawyer, college professor, and prolific author. His informative speeches, articles, and books make difficult subjects not only understandable, but enjoyable with the humor he brings to these complex issues. Steve is passionate about educating people through his website Scamicide.com.

• [1:16] - Steve has a personal backstory with a Ponzi scam because his father became the victim of one several years ago. His father was an astute businessman and the people involved with it seemed very honest.
• [1:50] - Steve also became a victim of identity theft himself and then wanted to help others not have the same problem.
• [2:29] - After WWI, Charles Ponzi came up with a plan to make money. Steve admits that it is very hard to explain and that is the key to a Ponzi scheme.
• [3:45] - Schemers blamed their victims for falling for the scheme. They claimed that they deserved what happened because they weren't smart enough.
• [4:58] - Steve describes how Charles Ponzi used the money from investors and shares why a more recent scheme in 2008 was successful.
• [5:46] - In the case of Charles Ponzi, law enforcement didn't bring him down. The media did.
• [6:29] - Ponzi did spend time in prison and was kicked out of the country. He went back to Italy and actually scammed Mussolini.
• [8:04] - Ponzi was probably not the first person to scam this way. In Steve's research, there was an earlier scam by a woman named Sarah Howe in the 1870s.
• [9:42] - Upon being released from prison, Sarah went back to her old ways and developed the same exact scam.
• [10:16] - Steve shares the story of Brad Bleidt to illustrate the term "affinity fraud." Brad was a Mason and other Masonic groups trusted him.
• [11:01] - Sarah Howe targeted women. Brad Bleidt targeted other Masons. Bernie Madoff targeted mostly other Jewish people. We trust those who are like us.
• [12:21] - Steve shares a story about how Bernie Madoff was actually found out much earlier and reported multiple times.
• [14:10] - This is not just an American phenomenon. A massive Ponzi scheme in Romania took down most of the nation's economy.
• [14:43] - When you deal with any kind of investment, you want to check out two things. The first thing is the person you're dealing with. The second thing is to fully understand what you're investing in.
• [15:28] - People like Madoff and Bleidt would be an investment advisor and the person who holds the investment. Most of the time, you want your investment advisor and custodian as separate people.
• [17:13] - Chris asks a new question of the guest and Steve says it is a very important question. Do these schemes start out as frauds to begin with or do they evolve into it?
• [19:10] - Some schemers don't start out that way. They need a little bit more money or time and before they know it, they're in too deep.
• [20:03] - Steve points out that Bernie Madoff may have been able to get away with his scheme forever if it weren't for the unprecedented economic issues in 2008.
• [21:42] - Bernie Madoff was never actually caught. He knew he was about to be caught and turned himself in. Steve shares the interesting facts of the case and where the money wound up.
• [24:29] - Ultimately, the money invested with Madoff was able to be returned to investors. But this is unusual. Most of the time, the money is dissipated