Ponzi schemes and religious affinity

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“Ponzi schemes are a type of illegal pyramid scheme named for Charles Ponzi, who duped thousands of New England residents into investing in a postage stamp speculation scheme back in the 1920s. Ponzi thought he could take advantage of differences between U.S. and foreign currencies used to buy and sell international mail coupons. Ponzi told investors that he could provide a 40% return in just 90 days compared with 5% for bank savings accounts. Ponzi was deluged with funds from investors, taking in $1 million during one three-hour period—and this was 1921! Though a few early investors were paid off to make the scheme look legitimate, an investigation found that Ponzi had only purchased about $30 worth of the international mail coupons.  Decades later, the Ponzi scheme continues to work on the “rob-Peter-to-pay-Paul” principle, as money from new investors is used to pay off earlier investors until the whole scheme collapses.  (“Ponzi schemes”, SEC)  Ponzi himself was so successful at his scheme that he convinced a majority of the Boston Police Department to invest and, in fact, continued to receive payments from true believers even while in prison.” (Investorswatchdog.com )

Video: How Do Ponzi Schemes Work?

” [Ponzi schemes] are typically orchestrated by people who look to their own churches or ethnic groups for investors. A large number of Madoff’s victims are, like Madoff himself, Jewish. Many of [Val] Southwick’s 817 victims were Mormon.”They are done in groups where people trust each other,” said Peter Henning.  Any Ponzi scheme is built on trust. People can’t ask too many questions.”  (The Many Faces of Ponzi.)  

“Often, to sweeten the pot, particularly in a religious affinity group scam, the scammer tells the charitably inclined victims that a portion of the profits of his investment program will be used for a charitable purpose near and dear to the hearts of the victims.”  (The Truth About Avoiding Scams)  

“[For example,] Utah Mormons and East Coast Jews. A sense of being special led both groups to fall for the oldest trick in the book.  Madoff found investors at the exclusive Palm Beach Country Club. Southwick found his at church. Madoff’s victims paid the club’s pricey fees for the chance to brush with the investment whiz and his proxies. Southwick used current and former Mormon bishops and kept a photo of his family with LDS Church President Thomas S. Monson in his office.  More than taking advantage of proximity, Madoff and Southwick plied a unique knowledge of their clients’ culture and armchair psychology to get greed to kick in. Madoff’s felt lucky. Southwick’s subscribed to Utah’s twist on Calvinism: Riches must be proof of righteousness.  There’s a reason the Ponzi scheme keeps working.”  (Salt Lake Tribune, This is the Place to Ponzi)

“To take another example, Madoff Fleeced Fifth Avenue Synagogue For $2 Billion.  Similarly, the charitable foundation started by Holocaust survivor and Nobel laureate Elie Wiesel says it was completely wiped out by Bernie Madoff.”

Other examples of Ponzi schemes based on religious affinity: 

“Philip Harmon [was] a Christian businessman with a seemingly thriving investment and insurance business empire.   “He was a pillar in the church and the community,” says Joy Getty. “He was a success.” Getty and her husband lost $133,000.  “I knew him through church,” says Tex Kazda, who lost his $119,000 retirement account. “He seemed honest and smart, and had lots of assets and a happy family.”  (Christianity Today)  

“Federal prosecutors in Manhattan have charged that Bryant Rodriguez, 44, insinuated himself into the [El Camino church] congregation last year — he showed up first for baptism classes — and enticed fellow churchgoers to trust their money with him. Now, about $600,000 is gone in a scheme prosecutors call a classic mold of financial grifting — neither sophisticated nor, in hindsight, difficult to see through.”  In This Scheme, Man Is Accused of Fleecing Fellow Churchgoers, New York Times

“Edward Purvis, the man who promised churchgoing investors in Arizona and 12 other states he could make them wealthy while funding Christian causes, was indicted Friday on 43 counts of fraud and theft.  Authorities accuse the 40-year-old Chandler man of operating a multimillion Ponzi-scheme through Nakami Chi Group Ministries International.” (Operator of Christian non-profit indicted in fraud, Arizona Republic)

“[Richard Piccoli], an 82-year-old businessman was charged Thursday [in Buffalo] with running a Ponzi scheme that took in at least $17 million from a clientele gleaned largely through ads in Catholic newspapers. The criminal complaint said Piccoli appeared to deliberately target clergy, cemetery funds and other church entities by limiting his advertising to Catholic publications.” (Business Week)

“Some Jews think Madoff case stokes anti-semitism.  Of all the words that have been used to describe the Bernard L. Madoff scandal, the most emotionally charged may be “Jewish.”   The disgraced investment guru is accused of orchestrating a $50 billion Ponzi scheme that preyed heavily on fellow Jews and ultimately drained the fortunes of numerous Jewish charities and institutions.  There’s nothing new about con artists targeting their own kind. There’s even a word for it — affinity fraud — and it has struck numerous religious, ethnic and professional groups.  Madoff’s bust for perpetrating a $50 billion Ponzi scheme has stoked up the anti-Semites – never mind that his biggest victims were other Jews.  The Web has been deluged with the brayings of bigots about “the greed and corruption of the Jews,” the Anti-Defamation League reported Friday.”  Jews are always a convenient scapegoat in times of crisis, but the Madoff scandal and the fact that so many of the defrauded investors are Jewish has created a perfect storm for the anti-Semites,” said the league’s Abe Foxman.” (Video)

UPDATED: List Of Victims Of Madoff’s Alleged Ponzi Scheme

 

 

 

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1 Comment

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One response to “Ponzi schemes and religious affinity

  1. Jeanne Mann

    Fantastic collection of Ponzi facts. These should be published at least once every ten years in every newspaper in the country.

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