Last night I was watching CNBC’s American Greed, a primetime TV series that examines the dark side of the American Dream and features some of their top scam artists of all time. This particular episode was about a high-flying lawyer who was acting as a discount house for, as it turned out, non-existent Court settlement payouts. Long story short; it was an elaborate ponzi scheme.
I ‘ve always asked myself how a ponzi scheme could go on for more than a few years without it somehow getting detected or crumbling under the weight of its ever increasing number of victims. I got some kind of breakthrough from this documentary. You see, some of the victims at some stage got a feeling, or actually knew, that something was amiss. But they wouldn’t blow the whistle: Lest they won’t get their money when the authorities move in. I want to assume that when they eventually got their money they convinced themselves everything was ok. I said to myself, ‘here lies the ponzi scheme’s energy source’. Eventually, however, the energy runs out and the scheme collapses, as did the one I was watching last night.
What would you do?
You are an investor in an apparently legitimate investment scheme. A few weeks before you redeem your investment, you discover that it was a ponzi scheme.