Sunday, July 19, 2009

Hey its the Ponz

Police uncover £80m 'Ponzi Scheme'

City of London police have uncovered an £80m Ponzi scheme, so elaborate that many of the victims still don't realise they have been conned. Apparently the bad boys endeared themselves to their victims and many considered them friends. Apparently the 600 victims include many celebrities amongst their ranks.

Posted by mikelivingstone @ 08:02 PM (1253 views)
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16 thoughts on “Hey its the Ponz

  • The going rate of return on Ponzi schemes is about 10% a month. If you’re offered 6%-13% per month then it’s a Ponzi scheme. Where do they find these “investors”? Are they needy, greedy or both?

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  • I think these ‘investors’ have a core belief that there is some sort of smart establishment club where the rules of gravity don’t apply and riches are guaranteed . The ponzi guy just has to wink at them and they con themselves

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  • happy mondays says:

    Does the uk tax payer pay into a ponzi scheme ? After all, we seem to pay alot in, to give the chosen few a life of luxury !

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  • It’s easy to sneer but we are probably more vulnerable to this sort of thing than we like to think. Years ago, I read a book about American confidence tricksters called ‘The Big Con’. Two of the more surprising things that came out of that book was that the victims sometimes wanted to repeat the experience and try the same con trick that cleaned them out even if the con man wasn’t interested and didn’t want to do it again. The other remarkable claim was that conmen are remarkably prone to being tricked as well – you’d think they’d know when they’re being set up but the book claimed not!

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  • Property investment seminars, now there’s a con.

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  • last_days_of_disco says:

    The biggest con of the lot is the welfare state.

    We are paying into this thing which is supposed to be there for us when we get old and need it but all the money is being spent up front. So the moment the confidence in the system is broken, the whole thing will collapse leaving the people who have contributed to it all their lives with nothing. Great system.

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  • Euopeanbear says:

    Biggest ponzi scheme is the housing market. It requires lots of FTBs or BTLs coming in(helped by compliant banks) to feed the frenzy higher up the chain. When these stop coming in the prices collapse (in slow motion because those that came in at the peak cannot believe they were conned)

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  • I once had an Equitable Life pension. At the time, I had no idea that my pension was invested in a Ponzi scheme, for thats what it was in a relatively mild form. I think the clue was in the fact that there was no way I or any other investor could ever hope to understand how the bonus scheme worked.

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  • mark wadsworth says:

    On the BBC it said this was a Ponzi scheme, as made famous by Bernie Madoff (seriously!).

    In the UK the biggest Ponzi schemes are of course the housing market but also pensions and hence to some extent shares.

    @ LDOD, the welfare state is not a Ponzi scheme, it is “Pay as you go”, it can’t run out of money because it’s not funded by over-confident investors, it’s funded by taxpayers.

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  • If something seems too good to be true it usually is.

    Anyone who believes they can get a 6-13% return per month for doing absolutely nothing deserves to have the money taken off them.

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  • last_days_of_disco says:

    @MW

    OK, then what is NI?

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  • george monsoon says:

    A fool and their money are soon parted. Sad.. but true.

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  • mark wadsworth says:

    @ LDOD

    NI is a tax on employment income and self-employment income, what else do you think it is?

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  • last_days_of_disco says:

    @mw

    Ok, but at least acknowledge that National Insurance is a misnomer, but I imagine you are being ironic. The welfare state is a huge drain on productive incomes and allows an enormous centralised bureaucracy to spring into being which simply is self perpetuating and delivers no benefit, in fact it stifles an independent efforts ruthlessly.

    Its eventually got to collapse under the sheer weight of its craziness. I mean basically what is happening now is that the government is borrowing from the future generations to basically keep an insolvent system going. I will be stuck with the bill for this profligacy and it will be like a millstone around the necks of every productive person in this country for twenty/thirty years, i.e. my entire working life.

    And at the end of it, all the money would have been used, just to pay back debt, I will get nothing because we spent it all paying the salary bill of the NHS, etc in 2009. I am not saying that there are not good people in the system but the system is fatally flawed and the longer it continues the worse things will be when it finally collapses.

    I am not saying we shouldn’t care for the weak, young and needy, etc, but this is out of control centralised, insanity. We need a radical change, and I would prefer if we didn’t have it done Ireland style (i.e. teachers, doctors, etc being thrown out while the bureaucracy lumbers on like a zombie of death).

    Sorry, this doesn’t have a direct relationship to house prices.

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  • National insurance is not ‘hypothecated’ for the NHS and benefits. It is not in fact insurance. The money just goes into the government’s general fund.

    The only real difference between NI and income tax is that NI doesn’t have variable allowances. The rates are now aligned at the upper earnings limit for anyone not getting taxable benefits (e.g. employer health insurance) and not getting tax credits. However, while the lower earnings limit was aligned in 2007/8, the personal allowance has increased more than the lower earnings limit, which now falls at £110/week or £5,720/year. For an employee in this position, they pay no tax on their first £5,720 of income, then 11% (NI) of the next £1,025, then pay 31% (20% income tax + 11% NI) on the next £37,400, then 41% (40% tax + 1% NI) on any income over that. To clarify:

    If you earn up to £5,720, no tax;
    If you earn up to £6,475, pay 11% of (amount earned – 5,720);
    If you earn up to £43,875, pay £112.75 + 31% of (amount earned – 6,475)
    If you earn over £43,875, pay £11,706.75 (£112.75 + £11,594 [31% of 37,400]) + 41% of (amount earned – 43,875)

    This is just barely progressive taxation, once both employment taxes are factored in. According to ONS, the 90th percentile of all salaried employees fell at £44,881, so only about 10% of the population in full-time salaried employment should pay the top rate, and they only pay it on the amount of their salary above that level.

    The other difference is that it’s assessed weekly, not annually, so if you only work part of the year you can’t claim back the NI you’ve paid, whereas you can claim back tax that was ‘overpaid’.

    What happened to the 10p tax band? It became an 11p NI band!

    Employers also have to pay 12.8% of their payments to employees that exceed £110/week. That is, if the employee earns £5,720, the employer pays nothing, but above that they pay 12.8% of (earnings – 5,720).

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  • Madoff’s scheme was only giving back about 15 – 20% YoY. And that was officially THE BIGGEST PONZI IN HUMAN HISTORY.

    When some prixk comes along and tells you that they can give you a better return than THE BIGGEST PONZI IN HUMAN HISTORY. And you think “Wow, that makes perfect sense to me. Please have my money!” You deserve to end up on street.

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