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12/13/2008

Ponzi scheme in Singapore?

Former chairman of Nasdaq, Bernard Madoff, is being charged for a massive fraud involving US$50 billion. He was running a huge hedge fund and paying good dividends for 15 years. What an unbeliever track record! For those who are staunch believers of track records, please take heart to this. Track records can be cooked anyway the chef wants it to look. What happened to Madoff was that he paid his old investors with money collected from new investors. He was losing money all the way. But through this version of the pyramid scheme, he collected new money to pay old debt that were due. Familiar? His con job could go on forever if he could find ways to keep the investors invested. Or he could bring in more and more new investors to cover up for the older investors. Or if he could delay the pay out to the old investors by keeping their money as long as he can. He should learn from the Redbean Bond. Keep the money and don't pay out. Just send to the investors their growing investments. That would keep the investors very happy and he could conceal his losses forever, and continue to pay himself handsomely, and crow about it. Unfortunately he could not hide it any longer. He could not bring in more investors to build a bigger and ever bigger pyramid base. He could not con more people to put money into a scheme that need not pay out for 20 or 30 years. When he has to pay according to the contractual terms, no delay is allowed, he is dead meat. Things will be different if he could shift the goal posts. Such a scheme cannot go on forever. It is only a matter of time before the pyramid collapses. And there are many such schemes in Wall Street. And all are collapsing. Wonder if there are any here? Why did I have this uneasy feeling, a bad hunch?

9 comments:

Anonymous said...

I heard that it was Benard Madoff sons that sent PaPpy to jail.

redbean said...

pappy is 70 years old. the beauty of it all is the sons just came to know about it because pappy told them. and the sons were the key members of the company. no doubt the hedge fund is a separate entity in dark secrecy. no transparency.

how much to believe?

Anonymous said...

Haha, he could have told his sons, don't worry, papa will solely take the fall and you two feign ignorance, and be heroes by reporting me. What a wonderful plot!

The Hermit said...

Didn't we have something similar here known as the Con Pleasant Fund?

Anonymous said...

I think that the many who are into ponzi schemes in Singapore did it because they want to get rich and have the same lifestyles of the rich, and that they were discriminated and have little options themselves to get rich the correct way. Some of them did it to amass enough capital to start a business. But it is a lousy feeling to be cheated by them. I believe there are very few malicious types who scheme to cheat others.

Francis Chua, Singapore

Anonymous said...

At least he got busted.

Social security schemes throughout the entire world are Ponzi by definition. But they are backed and 'protected' by the executive power of government - and that makes all the difference =) People LOVE them!

Anonymous said...

Read this somewhere...

CPF = Compulsory Ponzi Fraud

redbean said...

the truth will surface in a matter of time. only if you live long enough to see it.

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