One of the classic scams not only in Vietnam but also in the whole world, that is Ponzi model, good Ponzi scheme. Over time this model has become more and more sophisticated and more sophisticated. It takes place in many different fields such as multi-level sales, real estate, financial investment, forex, even selling courses in the field of education .... Although it has been around for hundreds of years and has been warned many times, there are always many people trapped. Ponzi scam model still often repeated in society. So What is the Ponzi pattern? Why are there so many people trapped? Ponzi tricks to such?
What is the Ponzi model?
The Ponzi scheme is a form of fraud named after the first person who established and created a world history trick in this way, named Charles Ponzi. The scam took place in 1920, causing a stir in the United States.
The Ponzi model is a form of borrowing money from the latter to pay people first with unusually high interest rates to continually attract new lenders. It is based on two pillar policies of paying high interest rates on loans and paying high commissions to referrals. Initial payments of interest and commissions are made very seriously and on time to create confidence. Thanks to that, this system is growing more and more levels.
Besides, the existing and developing Ponzi model must rely on Marketing to promote and build trust of the leadership.
In fact, the Ponzi scheme was not the first to appear in 1920. Since the 18th century it has appeared oddly in some places, even in some novels from the century. 18. But Charles Ponzi's scam was the biggest and the most shocking ever so it was named the Ponzi Model.
Who is Charles Ponzi?
Charles Ponzi, a native of Italy, has emigrated to the United States and worked profusely in livelihood. In 1920, when he discovered the huge price difference of stamps sold in European countries and those in the United States, he created a multi-level system that raised money from investors. Promises to bring in super profits. Initially he pays interest to lenders up to 45% in a month.
At the time of the collapse of the model, Ponzi's total system raised about US $ 15 million (equivalent to about US $ 1.2 billion at present), causing thousands of people to lose money, 6 banks were bankrupt. The case shocked America and constituted a classic example of a multi-level fraud system named after him - the Ponzi Model.
>> Read more Who is Charles Ponzi?
How the Ponzi Model works
In the beginning, there must be a mastermind to start the Ponzi scheme
In order for the Ponzi model to exist and develop, it must first be a happy leader, using a certain product or service as bait. They will promote to the public that investing in that product (service) will be super profitable and they are taking a great advantage in that business area. Once they have gained trust, they begin to promote capital mobilization, often in the form of loans from others. This loan is often referred to as an attractive name rather than "investment".
High interest policy, attractive commission
Besides, in order for the Ponzi model to thrive, it is required to have a high commission policy for those who recommend this "attractive investment" to others. As such, the lender (cum referrer) has both enjoyed high interest rates from the model, and has also received high commissions on each successful referral contract. Of course, they can choose to just lend money to enjoy high interest rates or just refer to get commission, or earn money in both ways.
For those who have received high interest from the initial loan, when the contract matures, if not alert and still greedy, they will continue to re-lend.
Development of the ponzi system
Initially, the people who started the Ponzi scheme would recruit more subordinates (called Level I). These first-level employees often act as both employees in the system, but also lend money to the leader. They were promised a very high return.
For those who receive high commissions from the Ponzi system, they will have a strong incentive to introduce new people, called the Ponzi system level II. Level II employees recruit additional level III employees…. And so the system is multiplied into n levels! All levels enjoy high commissions (and high yields on loans if they lend money to the system).
Polishing and building trust, hypnotizing the public
To create even more confidence, people in the Ponzi system often give evidence of receiving very high profits. Those are the actual payments paid by the system. The reason the Ponzi system has money to pay lenders is because it takes the lender's money later to pay the lender first.
The collapse of the ponzi model is inevitable
Without legal intervention and social upheaval, a Ponzi model will continue to exist and grow as long as it employs more subordinate members and lenders. to have more money to pay for the people in advance. At some point, the development was delayed, the high interest was due but not enough to pay, the Ponzi system gradually lost its credibility and collapsed very quickly.
Almost all lenders will lose money, only some of the leaders are hugging a high pile of money away. And some "investors" in the first phase have received a large profit, have withdrawn the principal and realized the risks of the model, do not be greedy to send money on, they will not lose money, in addition There is another interest.
Are the people planning the Ponzi scheme intentionally cheating?
Not really! Sometimes a serious business is inefficient, financially difficult. They need to borrow money to cover their businesses. Anyone who takes out a loan will convince the lender that he or she is able to pay off the debt, even doing well. However, after that the business was not favorable, and the debts were due to pay, but they did not have the financial resources to pay. So they are forced to borrow from other people at high rates to pay for them first.
In some cases, lending rates are so high that lenders lend to others to lend to businesses. At this rate it could automatically spawn a system of three, four, or even six levels ... This means it accidentally created a small Ponzi model with few levels.
If the business results are good, the business will pay its debts in full and ensure its reputation. However, if the business situation is not favorable, the business is insolvent, the whole system will collapse.
This shows that a business was originally completely legal, but gradually got bogged down and got into deception and became a Ponzi-style scam business.
The signs identify the Ponzi pattern
Above we have learned what is the Ponzi model? and how it works. However, as the society grows, ponzi-style scams also disappear and not everyone can recognize. In fact, although this model has been born for hundreds of years now, with countless painful lessons in both Vietnam and around the world, it still happens every year and millions of people are trapped. , because it's so sophisticated and constantly transforms from game to game.
In order not to get caught in the Ponzi trap and get caught in its whirlpool, we will rely on the following characteristics to identify:
- A Ponzi model is often committed to bringing very high returns with low risks to investors. This is the decoy against human greed. Remember, high profits always come with big risks and nothing is certain in the market. Such braggers will surely flare your money.
- Referrals receive unusually high commission from the system. You need to ask where the high commission comes from? Well usually they take the latter's to pay the person first! This is one of the most important characteristics of the Ponzi model.
- The organization and its owner are often overshadowed to hypnotize unsuspecting investors. The people in the system illusion into the organization they are working with. They go to persuade others tirelessly. Yes, because they were hypnotized by their leaders!
- Products (or services) of investment projects are often vague, unclear or confusing. Yes, their products are either not real, or not commensurate with their value, or illegal!
- The contract focuses primarily on a high return. Besides, there will be adverse terms that make it very difficult for investors to withdraw money from the system. Yes, because the ultimate goal is that they want to keep as much of the investor's money as possible in order to flare up.
- The investor's business registration documents are not transparent. When investors want to find out, it will be difficult to access. Yes, because they deliberately tricked you.
- The owners of the Ponzi model often have an unclear identity, which is difficult to learn through the mass media. However, in some cases their reputation is overly polished to create public confidence. Right. Either they will remain anonymous so they can run away, or they are illusionists so they can go to the field, declare themselves saints, and at the same time encourage a whole system of unreasonable blackheads.
- The organization of the model creates a system with many different levels. At the same time, all levels have equal benefits. You see, they have dozens, hundreds of levels, but every level gets the same profit, where does the money come from? It is true that the Ponzi are cheating.
Why Ponzi-style scams still have live land
Although the Ponzi scheme has been around for hundreds of years, scams in the corners of the world often occur. The media is constantly referring to these cases, but it still happens every year. It happens in even the most civilized countries in the world, like the United States, to poor nations in Africa. It was even staged by the State by: The government borrowed money through the issuance of bonds to finance the repayment of principal and interest of old loans by issuing bonds. Why is that?
Here are the reasons why the Ponzi pattern is still common today:
Greed of man
Well the first reason to mention that is the greed of people. Because it is the most root cause of the Ponzi scheme, the human greed has always been there.
The crooks have taken advantage of human greed, hit the psychology of wanting to make quick money to blur investors' eyes. When the greed arises is the time when human reason is low. Then people will only see the profits are drawn without seeing the dark intent, the risks behind it.
Even if there are many people who can afford to realize the nature of the problem, they still rush in. They take risks, bet on themselves to be the one who gets the interest and capital, get out of the system before others. There were actually some more fortunate people who did so, but most of them lost money.
Gullibility of investors
Although there are many lessons in the world related to the Ponzi model, not everyone can access that information. Even if they already know the pattern, it is not smart enough to recognize the pitfalls they are facing. Scammers are also becoming more sophisticated these days, able to use new communication tools to hypnotize the public vigorously, causing more and more people to fall for.
Unemployed people want to make money fast.
Perhaps the unemployed, gullible, want to make a lot of money and fast is one of the important materials to build the system. Which society, every time, every country has such people. Therefore, the Ponzi model always exists.
Products and services (decoys) are increasingly diverse and sophisticated
In the past, the "baits" of the Ponzi model were used primarily as tangible products. But these days, the bait has become much more sophisticated and diverse. It could be a course, a real estate project, a virtual money project, even a foreign exchange investment project (forex).
All of those products and services are polished with a beautiful "investment" name and are often associated with new, modern, 4.0 technologies. Generally, it is to hit on new things, pioneers to stimulate the ego of investors, and also ones that people do not fully understand about it.
The mastermind's ability to take advantage of sophisticated communication
It is a fact that the Ponzi-type scams not only do not disappear, but appear more and more, on a larger scale.
From the available materials, greedy, gullible, unemployed and people who have money but don't know what to do with money, Ponzi planners have actively taken advantage of new media such as network interntet, Google, Facebook, Zalo .... to propagate to attract more customers with more sources of money.
The world famous Ponzi scams
Bernie Madoff - The largest Ponzi super trick in the world
Madoff (born in 1938), before being arrested as President of the Nasdaq Stock Exchange (USA). In 2008, Madoff was accused of financial fraud in the form of a Ponzi model with the amount of up to 64.8 billion dollars, the largest in the world history. He deceived even the largest companies and banks in the world such as Santander of Spain, British Bank HSBC, Royal Bank of Scotland, BNP Bank of France, Nomura Bank (Japan) ... And tricked world famous figures such as Elie Wiesel, Nobel Peace Prize winner in 1986, director Steven Spielberg (USA) to millionaires, investment consulting companies and hedge funds (hedge) ...
Victims of Madoff …… >> Continue reading: The world famous Ponzi scam
You have just read the article: "What is the Ponzi model? How ponzi model works”
Author: Pham Khuong
Do not forget prefer and share This article will you do?
0 Comments