Ever Gullible

Bernie Madoff made me do it. The man ran a Ponzi Scheme; he took money from those who wanted a good return on their investment and paid off with money from new "clients." He promised a 12% per annum return. That's actually about what I was making in my 401K before the bottom dropped out of the market. Of course, the guys who were managing my 401K accounts were actually investing the money. That wasn't true of Bernie. He ran a true Ponzi Scheme.

Of course, I had to learn more about this. What better choice than to read Ponzi's Scheme by Mitchell Zuckoff. Ponzi was an Italian immigrant at the turn of the last century with a checkered past who settled in Boston and found a clever way to build the fortune he so deeply desired. He promised a 50% increase in the value of investments in 45 days. He said that he was buying and selling postal certificates. I still don't quite understand what those are, but I don't think it matters. He wasn't buying and selling them anyway. He relied on the long line of gullible people streaming from his office doors. His company's name was The Security Exchange Company. The reader of this book goofed once and called it The Security Exchange Commission. I was waiting for that.

Ponzi would bring in over a million a day at the best of times. That's why he had money to pay off the people who didn't roll over their profits. A million dollars! The newspaper cost two cents at that time. People had to scrimp and save for a long time to get $50. And yet, they gave that money to Ponzi.

The book is also about how a newspaper, The Boston Post, nailed him. Police and other legal types failed. In fact, a lot of them were investors. The owner of the Post didn't believe this scheme was real and worried about the pressmen who were investing. We may not have newspapers around soon, but we will always have charlatans.