The Museum of Hoaxes
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Ponzi Schemes
Madoff Investment Securities, 2008
Bernard Madoff founded Bernard L. Madoff Investment Securities LLC in 1960. It became a prestigious firm on Wall Street, acting both as a market-maker (a middleman between buyers and sellers of shares) and as an investment fund that managed money for high-net-worth individuals and institutions. Year after year Madoff delivered reliable annual returns of around 10% for his investors. He managed to do this even in down markets when everyone else was losing money. These returns inevitably created suspicions, but billions of dollars continued to be entrusted to him, principally because he always paid out if anyone requested their money. More…
Charles Ponzi and the Ponzi Scheme, 1920
Charles Ponzi (1883-1949) Charles Ponzi, an Italian immigrant living in Boston in the early twentieth century, was said by his worshipful followers to have "discovered money." In fact, what he really discovered was a way to bilk the public out of millions of dollars by means of a financial pyramid scheme. There were pyramid schemes before Ponzi came along, but his was so outrageous that this type of scam has ever since borne his name. More…
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