Money Laundering - So What? III

FINLAND

     In a nice change from yesterday's post, today we will discuss Finland.  Despite having only been an independent nation since 1917 (note that Albania became independent in 1912) and suffering through World War II having been pummeled by the then Soviet Union (although they did put up a good fight), Finland stands today as one of the least corrupt countries in the world.

    Finland is always highly rated by Transparency International as one of the "shining spots" in the world that fights corruption and money laundering and places a priority on these issues.  The results speak for themselves: Finland is one of most stable countries in the world with a very high standard of living.

    Finland does have its problems, of course.  It borders Russia and is a transit point for Russian criminal gangs and such gangs do try to use Finland as a transit point.  However, Finnish authorities are successful in their efforts at combating these organizations and, as stated, place a high priority on transparency.

     As always, have a great and fraud free day

http://www.tauskvega.com

--------------->>>>>>>>>>>>>>>>>gene tausk

Money Laundering - So What? II

OK - let's start examining the effects of money laundering on individual nations.  Keep in mind the following disclaimer - I am not here, nor is it the purpose of this blog, to single out any countries or peoples and point at them.  Money laundering is a WORLDWIDE problem.  But, let's face it, there are countries that have worse problems than others and we need to examine just how money laundering is a problem.  So, although this blog will point out individual countries, this is not meant to insult the peoples or civilizations of these lands, but merely to point out that, at least in this regard, these countries have some work to do.

ALBANIA.

     Albania until the end of the 1980's was the home of the most tyrannical Communist government in Eastern Europe.  When Communism fell apart, nothing was left to replace it and criminal organizations moved in (some were already present since, despite popular views to the contrary, criminal mafias grow and expand under Communism).  The result was a disaster which led to the entire country being consumed by a massive Ponzi scheme (but that is for a later post).

    As a result, 20 years on, the country still faces major problems.  It is a money laundering hub with a weak financial system.  As a result, the country is highly corrupt, rating a low scale from the independent organization Transparency International.  Money laundering is helping to keep Albania a very poor country with unreliable banking systems.

Here is a little link to the crisis of the 90's:http://www.tinbergen.nl/uvatin/99045.pdf

Have a great and fraud-free day.

http://www.tauskvega.com

-------------->>>>>>>>>>>>>>>gene

Money Laundering - So What?

This next series of columns examines the financial cost of money laundering on the world's economic system.  We have already explored what is money laundering and the three stages of a money laundering operation.  Money laundering is, in and of itself, not difficult.

     But, as the title of this post suggest, so what?  Who cares?  Aside from the point that it covers up the proceeds of illegal operations, what exactly is so bad about money laundering and why should we care about it?Certainly in the grand scheme of things there are more important matters for our concern.

     As we will see, however, money laundering affects many people, especially in this post-911 world.  It is not just a way for Vinnie and Luigi (or, if you prefer, Sergei and Vladislav), to hide their ill-gotten gains dealing drugs or running bootleg liquor.  The affects on the world are much more severe.  And, we will analyze this by looking at several countries who are affected by these operations.

     In the meantime, as we begin, enjoy this little article about the late, great Tom Delay, once speaker of the House, now fighting money laundering charges.

http://www.mysanantonio.com/news/local_news/article/DeLay-files-wide-appeal-on-money-laundering-1974908.php

As always, have a great and fraud-free day.

http://www.tauskvega.com

-------------->>>>>>>>>>>>>>>>gene tausk

Interludes

Fraud also involves the use of fraudulent documents.


http://www.justice.gov/usao/txs/1News/Releases/2011%20June/110615%20Stilwell%20et%20al.htm

http://www.tauskvega.com

----------->>>>>>>>>>>>>>gene tausk

Interludes

Nothing much to post as we move onto our new topic.

In the meantime, here is an interesting arrest made in Houston the other day regarding financial services fraud.  Enjoy.

http://www.justice.gov/usao/txs/1News/Releases/2011%20August/110825%20ONeill.htm

http://www.tauskvega.com

------------->>>>>>>>>>>>>>>gene tausk

Washing away all my problems XI

OK - we have reviewed how money is "laundered."  In essence, this is how all money laundering is done, from the very low amounts of a few thousand dollars to the billions of dollars that are laundered almost weekly through the world's financial systems.  All it takes are these three steps: placement, layering, integration.  These three steps are necessary for all operations.

     What then, makes money laundering such a huge issue?  Why are governments, and world national (and transnational bodies) upset and fearful of money laundering operations?  Well, we will be covering this in the next series of posts, but the basic answer is: money laundering is the way to fund illegal operations.

     There is a basic statement and rule of thumb for all white-collar and fraud investigations and prosecutions: follow the money.  This is how most white collar and fraud operations are ultimately "busted" by the police and authorities.  Once the source of the money is found, the game, as they say, is up.  This is why money needs to be whitewashed so it cannot be followed.

     So, we now know how money is laundered.  The next step is to determine why it is such a threat, and we will be doing this in the next series of posts.

     As always, have a great and fraud-free day.

http://www.tauskvega.com

------------>>>>>>>>>>>>>>>gene tausk

Washing away all my problems X

OK - so here is a review of the three stages of money laundering:

1.  Placement - the illegal funds need to be placed into the banking system.  It is necessary not only because of the physical impossibility of hauling around large amounts of cash, but also because it is expedient to get the funds into a place where they can be later utilized without fear that the funds can be stolen.

2.  Layering.  Just putting the money into the banking system is not enough.  The money cannot be just sitting in one "block" that stands out.  It is too easy to trace such transactions and the large sum will likely draw suspicion sooner or later.  The money has to have several "layers" so that the funds can be dispersed throughout several accounts or types of financial institutions or products.

3.  Integration.  At this stage, the monies have been filtered through the financial system and now can be taken out at will by the launderer.

     Once these steps have been enacted, the money has been fully laundered and is now available.

As always, have a great and fraud-free day.

http://www.tauskvega.com

---------------------->>>>>>>>>>>>>>gene

Washing away all my problems IX

OK - let's discuss the last stage in the money laundering process.  This is the Integration phase.  This is the step where the original proceeds of the crime have been introduced into the system and "washed" so the money can now be taken out of the banking system and used.

     Just like the proceeds of any crime, or any funds for that matter, the whole purpose of the money laundering process is to provide funds to the launderer so that at one point the funds can be available.  The Integration phase is where the funds become available for use by the launderer.

    In a sense, this is the whole point of money laundering: to get the funds to this point where they are readily available.  At this phase, the money can be used not only by the launderer for his purchases, paradoxically enough, they can be taken out and reinvested into other money laundering schemes.

    So, the launderer has achieved his goal and now has money at his disposal for future operations.

As always, have a great and fraud-free day.

http://www.tauskvega.com


------------>>>>>>>>>>>>>>gene tausk

Washing away all my problems VIII

OK - back to reality (or at least, talking about money laundering)

     We've discussed the first step in the laundering process, namely, getting the money into the world's banking system. We've seen that there are many ways to do this, some of them downright strange (such as the IRS "refund"), but there are no shortages of creative ways to introduce the monies into the world's financial system.

     The next step is the "layering" process.  The money may be placed into the banking system, but it is still in one place and, as such, can be easily identified.  The money must be layered around so that it is not so easy to identify.

    Sometimes, the money is moved around in the same financial institution (i.e. different bank accounts and products).  Sometimes, it is moved from one financial institution to another.  Sometimes, currency trading occurs or the money is converted into traveler's checks or another type of financial product.  As with the first step, there are no limits to the imagination.

     We will continue with this tommorrow.

As always, have a great and fraud free day.

http://www.tauskvega.com

------------>>>>>>>>>>>>>>gene tausk

Interludes - Kurt Barton II

I received more email concerning Kurt Barton so I thought I would continue with this thread for another night.

     The fraud perpetuated by Kurt Barton is, as we discussed, not unique.  It is (almost) your standard run-of-the-mill Ponzi scheme.  The vast majority of the funds that Barton received were used to pay other investors, not re-invest in other investments.

     What does make this somewhat unique, although not surprising, is the use of celebrity endorsements.  In this case, Barton used football players that he also took in on the scam.

     One of the most important strategies used by fraudsters is diversion.  If the fraudster can flash enough "smoke and mirrors" at a target, it can divert the target's attention to allow the fraudster to move forward with his scam because the target's attention is diverted.  This is often why there is no shortage of attractive women that are used by  fraudsters.

     It is important to note that different types of diversions are used and stars, including star football players, can be part of these diversions.


As always, have a great and fraud-free day.

http://www.tauskvega.com

------------->>>>>>>>>>>>>>gene tausk

Interludes - Kurt Barton

I need to take a break from our discussions regarding money laundering to discuss Kurt Barton.

Here is a link:http://www.statesman.com/news/local/barton-found-guilty-on-all-39-counts-of-1757300.html

Kurt Barton was a Triton Financial Chief executive who was found guilty of running a classic Ponzi scheme (we discussed Ponzi schemes earlier).

He defrauded hundreds of investors.  In a new twist on this old scam, he used Heisman winning football players to raise money for his schemes and frauds.  The football players were apparently taken in as well and lost their monies.

      As we discussed during our postings regarding Ponzi schemes, there is nothing new under the sun.  Evidence shows that Barton's employment of football players was just another way to run this old scam.  People trusted the sports figures.  But, as we discussed previously, this is a way in which a fraudster gains the trust of his marks - using figures whom people will trust.

     Just another example of how the more things change, the more they stay the same.  Barton is facing up to thirty years in prison.

As always, have a great and fraud-free day.

http://www.tauskvega.com

------------->>>>>>>>>>>>>>gene tausk

Washing away all my problems VII

OK - we've discussed ways that money "laundered" can get into the system.  As we have seen, there are many opportunities and none of them require a great deal of intelligence or planning.  It can be done by just about anyone thinking ahead and using some common sense.

    I would once again, however, like to take this opportunity to address a question from a reader - what about the actual transfer of money?  Why not just take money physically from one place to another and store it in safe deposit boxes and the like?

    So, this once again is a decent question and deserves a response.

     First, it is important to remember, and this is a basic law of physics, that large amounts of money are heavy.  Imagine having one million dollars, in tens, twenties and one hundred dollar bills.  How much would this weigh?  How heavy is it to carry around?  Try a thought experiment - it cannot be done without a great deal of effort.  Also, there is the insecurity of knowing that if you carry around a great deal of money, it can always be stolen from you (and there is something poetic about that).

     Second, even storing large amounts of money in a safe or safe-deposit box carries risks.  Safes and safe-deposit boxes only can hold a finite amount of money.  Remember, money laundering involves millions and billions of dollars.  It is physically impossible to store all of that money in one place (short of a bank vault of course, but once again this carries the possibility of theft as outlined above).

   So, money laundering is done not only because it is a scheme, but because it is a necessity.

    We will move forward with the remainder of defining money laundering tomorrow.

As always, have a great and fraud-free day.

http://www.tauskvega.com

------------->>>>>>>>>>>>>>gene tausk

Washing away all my problems VI

Let's conclude this portion of the discussion on how funds are laundered.

     Another method to launder funds that has been used is, incredibly enough, overpayments to the IRS.  The launderer will send a massive check to the IRS and then have the overpayment returned to him.  There is no question from the government, just an overpayment which sometimes happens, and the monies are returned.  Stange, but true.

     Another example are money changing shops, where currency is converted from the currency of one nation to that of another.  Or, as popular here in Texas and other Southern states, stores that offer money orders to Mexico and other nations.  It is fairly easy to launder money through these types of stores (it goes without saying, of course, that there are many honest and law-abiding money changing and money transfer stores and they should not all be "lumped" together).

     Finally, another method is to take the money OUTSIDE the U.S. (or whatever country) and wire it back, in small amounts, to the U.S.

    It should be fairly clear then, at this point, that money laundering methods are ingeniously simple.  They do not have to be incredibly complicated "James Bond" patterns.

    We will explore the other stages of money laundering tommorrow.

As always, have a great and fraud-free day.

http://www.tauskvega.com

----------->>>>>>>>>>>>>gene tausk

Washing away all my problems V

Let's continue with our discussion on how to place the funds from a criminal enterprise.  Remember, this is the first step in a money-laundering operation.

    Another way to get funds into the "system" is to purchase a high-value item, such as an expensive work of art, property, diamond or other precious stone or metal, or something of equal high value.  This item is then sold to a legitimate purchaser, who will then, of course, pay actual value for it.

    This has several advantages.  First, there is no question that a high-value item obviously needs to sell for the same high value.  If a diamond dealer buys a diamond from someone and pays a great deal of money for it, but this is the actual price of the diamond is a legitimate price, then there is no way to argue that the money spent for the diamond is legitimate.  The launderer has therefore achieved his goal - he has laundered his money by buying an expensive object in cash (dirty money) and exchanged it for "clean" money.

    The second advantage is that this is a one-step process, unlike owning a business which will require multiple transactions.

  We will continue with this tommorrow.

As always, have a great and fraud-free day.

http://www.tauskvega.com

------------>>>>>>>>>>>>>>gene tausk

Washing away all my problems IV

Let's discuss the three stages of money laundering.  After all, money laundering is a multi-step operation like most financial operations or deals, so money laundering, although illegal, should be no different.

      The first thing to have, of course, is money that needs to be laundered.  So, if our average run-of-the-mill drug dealer has finished a transaction where he has $1 million as a result, he now has one million dollars that needs to be laundered away.

     The first step is to get the money into the banking system.  In other words, the money has to be placed from the criminal's location into the system so it can be "flushed" through the system.  If the money never moves, then it never can be laundered.

     Now, this does not necessarily mean opening up a bank account.  In fact, it is very difficult to do this.  You cannot just take $1 million and deposit it, site unseen, into a U.S. (or most foreign country's) banks without filling out forms and identifying yourself to the authorities.  In fact, in the U.S., any transaction over $10,000 is automatically cited.  So, the real question is - how can large sums of money be placed into the banking system so they can be laundered?

     As we discussed earlier, one simple method is to invest the money into a business that has a high cash flow, like a restaurant.  This is one easy method to get the money directly into the system.

    It is not the only one, however, and we will discuss other methods tommorrow.

As always, have a great and fraud-free day.

http://www.tauskvega.com


------------>>>>>>>>>>>>>>>>gene tausk

Washing away all my problems III

I want to stick with the topic for a few posts about the scope and scale of money laundering.  We discussed earlier as to how money laundering began mainly by criminal groups to whitewash illegally obtained funds and the term itself was coined in the 1920's.   But, it has reached far beyond these early stages.

    Money laundering by international criminal enterprises is now to the point where it challenges the legitimate governments of many countries.  In some countries, such as Mexico, Russia, some states of the Former Soviet Union and Haiti, the wealth and power of criminal enterprises actually rivals the wealth and power of the government of the country.  To say this problem is "vast" is an understatement.

   Money laundering assists with the drug trade.  Not just the street dime bag vendors, but the manufacturing of drugs in large scale, organized and commercial operations (like meth labs).  Billions of these dollars need to be laundered so that the recipients can have an income.

    Illegal arms sales use money laundering to hide these sales.

   Prostitution.  Once again, we are not talking about street-corner isolated incidents, but the trafficking of human beings (large scale) which involves literally the buying and selling of people and the money from these transactions which is laundered away.

    Corruption.  Countries that rank high in corruption are also high in money laundering for obvious reasons - the recipients of these corrupt dollars (or whatever currency) needs to show the money is coming from a legitimate source.

   This gives us an idea of the scope of money laundering and how it affects us all.

As always, have a great and fraud-free day.

htt

Washing away all my problems II

I received an email from a reader asking me what money laundering has to do with fraud.  It's a good question, so I thought I would take an interlude tonight and answer this.

    It is important to remember that laundering is the system and method by which all proceeds of a crime are intergrated into the banking systems and business environments all over the world.  The proceeds of a crime, namely the monies and the owners of these dirty monies are transformed (well, not the owners) so that the proceeds appear to originate from a legitimate source.  This way, the funds disappear and the criminals can have the benefits of their "work."

   Money laundering is not done by small-time crooks anymore.  It is one of the primary sources in which major criminal groups receive their funds, including:

Mafia organizations (Russian and Italian)
Yakuza (Japanese)
Nigerian gangs (including 419 scammers)
Mexican drug cartels

   Further, this is the method by which Al Quaeda and other Islamic terrorist groups get their funds as well (one of the primary methods).

   So, money laundering is indeed fraud because deceitful means are being used to get monies, or in this case, hide from where the monies are coming.

As always, have a great and fraud-free day.

http://www.tauskvega.com

------------>>>>>>>>>>>>>gene tausk

Washing away all my problems I

Money laundering.  It sounds kind of funny (it is hard to translate this phrase to other languages from English), but it is one of the most serious issues of the 21st century (so far).  Money laundering used to be a way for thugs to literally whitewash their illegal earnings.  Now, it has become a way for terrorists to fund their operations.  Groups like Al-Quaeda would be out of business overnight if they could not get money to function.  Because of money-laundering operations, they sometimes make more money than some governments.

     But, let's start at the beginning.  What is money laundering?  Simply put, it is a way to disassociate the proceeds of criminal endevours from the activities themselves.  If someone is making money by drug dealing, if he deposits his ill-gotten gains in a bank, especially large amounts of money or a continued influx of cash receipts with no verification from where this money arose, then sooner or later this bank account, and eventually the person, will find themselves the target of an investigation.  Of course, no self-respecting criminal wants this.

    So, the only way around this is to "clean" the money, hence the phrase.  The easiest way to do this is to take over businesses with a high cash turnover, like restaurants, and then proceed to mingle the cash generated from the illegal activity with the legitimate income, thus creating a logical and commercial reason for the large sums of cash.  The term "money laundering" came about because in the 1920's, laundry operations were the primary source for laundering operations.

    So, we being our exploration of money laundering.  Should be fun.

As always, have a great and fraud-free day.

http://www.tauskvega.com

--------------->>>>>>>>>>>>>>>>>gene tausk

Interludes

To my readers - sorry for the delay in posting - the usual suspects at work.

    We have discussed Charles Ponzi and discovered the man behind his massive fraud scheme.  As posted earlier, we saw that Ponzi played off of basic human emotions to get rich quickly as well as use his charismatic personality to draw investors.

    Beginning tomorrow, this blog will move forward and discuss money laundering.  It will be an introductory discussion as money laundering, like most fraud topics, is a large field and deserves special consideration.  But, we have to begin from somewhere.

    As always, have a great and fraud-free day.

http://www.tauskvega.com

------------->>>>>>>>>>>>>>>>>gene tausk

The Great Charles Ponzi XV

We've seen the rise and fall of Charles Ponzi, the 20th century's first great, well-known con artist who achieved a kind of immortality with his name now forever linked to the name of a scheme linked with fraud and deceipt.  So intertwined is his name with fraud that his name is mentioned in countless Federal and State lawsuits and criminal prosecutions and is self-defining.

     Note one thing I mentioned at the very beginning of this thread - Ponzi already had a criminal past when he began his fraud scheme.  This goes also to what I said at the beginning - fraud schemes and con artists, no matter how elaborate or "charming" (as Hollywood would have it), are criminals at heart.  They seek to defraud people.  Their methods and means may be more "polite" than holding up someone with a gun or beating a person for his money, but the results are the same - a person loses his money through dishonest means.

     Ponzi's scheme had all the hallmarks of a "get rich quick" idea that appealed to the baser instincts of human nature.  While it seems lucridous to believe that people fell for it, keep in mind that Ponzi schemes are alive and well today.  If Ponzi could come back from the dead, he would look at Enron and other modern-day frauds and feel right at home.

     Ponzi would be the first to say that human nature does not change and people like Ponzi would always be around to take advantage of it.

    In his own way, therefore, Ponzi was indeed "great."

Have a great and fraud free day.

http://www.tauskvega.com

------------>>>>>>>>>>>gene tausk

The Great Charles Ponzi XIV

Let's look at the ultimate fate of Charles Ponzi, once again courtesy of Wikipedia:

In two federal indictments, Ponzi was charged with 86 counts of mail fraud. At the urging of his wife, on November 1, 1920, Ponzi pleaded guilty to a single count before Judge Clarence Hale, who declared before sentencing, "Here was a man with all the duties of seeking large money. He concocted a scheme which, on his counsel's admission, did defraud men and women. It will not do to have the world understand that such a scheme as that can be carried out ... without receiving substantial punishment." He was sentenced to five years in federal prison.^[7]

He was released after three and a half years and was almost immediately indicted on 22 Massachusetts state charges of larceny.^[1] This came as a surprise to Ponzi; he thought he had a deal calling for the state to drop any charges against him if he pleaded guilty to the federal charges. He sued, claiming that as a federal prisoner he could not be tried by the state. The case, Ponzi v. Fessenden, made it all the way to the Supreme Court of the United States. On the 27th of March, 1922, the Supreme Court ruled that plea bargains on federal charges have no standing regarding state charges. It also ruled that Ponzi was not facing double jeopardy because Massachusetts was charging him with larceny while the federal government charged him with mail fraud (even though the charges implicated the same criminal operation).

In October 1922, he was tried on the first ten larceny counts. Since he was insolvent, Ponzi served as his own attorney and, being as persuasive as he had been to investors, the jury found him not guilty on all charges. He was tried a second time on five of the remaining charges, and the jury deadlocked. Ponzi was found guilty at a third trial, and was sentenced to an additional seven to nine years in prison as "a common and notorious thief." ^[7]

After word got out that Ponzi had never obtained American citizenship (despite having lived in the United States for most of the time since 1903), federal officials initiated efforts to have him deported as an undesirable alien in 1922.^[8]

Ponzi was released on bail as he appealed the state conviction. He went to the Springfield neighborhood of Jacksonville, Florida and launched the Charpon Land Syndicate ("Charpon" is an amalgam of his name), offering investors in September 1925 tiny tracts of land, some under water, and promising 200 percent returns in 60 days.^[1] In reality, it was a scam that sold swampland in Columbia County.^[9] Ponzi was indicted by a Duval County grand jury in February 1926 and charged with violating Florida trust and securities laws. A jury found him guilty on the securities charges, and the judge sentenced him to a year in the Florida State Prison. Ponzi appealed his conviction and was freed after posting a $1,500 bond.

Ponzi traveled to Tampa,^[9] where he shaved his head, grew a moustache, and tried to flee the country as a crewman on a merchant ship bound for Italy. The ship, however, made one last American port call; he was caught in New Orleans and sent back to Massachusetts to serve out his prison term.^[1] Ponzi served seven more years in prison.

In the meantime, government investigators tried to trace Ponzi's convoluted accounts to figure out how much money he had taken and where it had gone. They never managed to untangle it and could conclude only that millions had gone through his hands.

Ponzi was released in 1934. With the release came an immediate order to have him deported to Italy. He asked for a full pardon from Governor Joseph B. Ely. However, on July 13, Ely turned the appeal down.^[10] His charismatic confidence had faded, and when he left the prison gates, he was met by an angry crowd. He told reporters before he left, "I went looking for trouble, and I found it."

Rose stayed behind and later divorced him in 1937,^[11] as she did not want to leave Boston. Rose, who later remarried, eventually became the bookkeeper for the New Cocoanut Grove Inc, the parent company of Boston's Cocoanut Grove nightclub.^[3][12][13]

In Italy, Ponzi jumped from scheme to scheme, but little came of them. He eventually got a job in Brazil as an agent for Ala Littoria, the Italian state airline.^[2] During World War II, however, Brazil sided with the Allies, and the airline's operation in the country was shut down. During that time, Ponzi also wrote his autobiography.^[14]

[edit]

Ponzi spent the last years of his life in poverty, working occasionally as a translator. His health suffered. A heart attack in 1941 left him considerably weakened. His eyesight began failing, and by 1948, he was almost completely blind. A brain hemorrhage paralyzed his right leg and arm. He died in a charity hospital in Rio de Janeiro, the Hospital São Francisco de Assis of Federal University of Rio de Janeiro on January 18, 1949.^[2]

We will conclude our discussion of Charles Ponzi tommorrow.

http://www.tauskvega.com

-------------------->>>>>>>>>>>>>>>>>>gene tausk

The Great Charles Ponzi XIII

We will be wrapping up our conversations about Charles Ponzi.  Ponzi created the classic, well, Ponzi scheme.

It had all the elements:

1.  The Benefit - the investor is lured by promises of amazing, but not completely unrealistic, returns.  This is the classic "hook."

2.  The setup - a believable explanation as to how money will be made.  In Ponzi's case, it was the postal marker  scheme.  It was believable and acceptable.

3.  Initial Credibility - the person running the scheme has to have the credibility and charisma to pull it off.  Ponzi had these qualities.

4.   Initial investors paid off.  Ponzi's initial investors were paid off, and were, of course, very happy.

5.  Communicated success.  These initial investors told other investors and.......so it goes.

Read through Ponzi's history again in the previous posts.  We can see how these elements emerged and were applied.


As always, have a great and fraud-free day.

http://www.tauskvega.com

-------------->>>>>>>>>>>>>>>>gene tausk

The Great Charles Ponzi XII

Well, we saw the fate of Charles Ponzi.  Please note I mentioned at the beginning of this series of posts that Ponzi was not the first person to actually do a "Ponzi Scheme," but his name is forever linked with the scheme and the victims that followed.  Why was Ponzi so unlucky (or lucky since he has achieved a type of immortality) to achieve this dubious distinction?

     Ponzi lived during the beginning of the age of mass communication - namely that of radio.  The 1920's, when Ponzi was operating, was the birth radio technology.  Much like the net and various apps and smartphones today, radio had the possibility to change the world because, for the first time in human history, allow people to be connected instantaneously.  It was a new technology and was just barely beginning to be exploited.  Also, it was a form of mass communication technology that was, more or less, available to all Americans.

    Like any new technology, the uses of this technology when it starts is always questionable.  People are always asking "just how viable is this technology and will it last?"  Try looking at the history of 8-track tapes and Betamax for recent examples of technology failure.

   Radio, however, was an invention at the right place and at the right time.  And, a story like Ponzi's was almost created for this new medium.  Ponzi's scheme could be written in newspapers for instant distribution and read aloud on radio for instant transmission.  Millions of people could suddenly be aware of this vast scheme and the incredible numbers of people who were defrauded.

    Radio was in the right place at the right time, but Ponzi was in the opposite situation if he wanted to be forgotten by history.

As always, have a great and fraud-free day.

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--------------->>>>>>>>>>>>>>>gene tausk