U.S. charges Stanford with massive Ponzi scheme
By Anna Driver
Fri Feb 27, 8:38 pm ET
HOUSTON (Reuters) – U.S. securities regulators on Friday accused Texas billionaire Allen Stanford, his college roommate and three of their companies of carrying out a “massive Ponzi scheme” over at least a decade and misappropriating at least $1.6 billion of investors’ money.
In an amended complaint filed in a federal court in Dallas, the Securities and Exchange Commission increased its civil charges against Stanford to include a Ponzi scheme where early investors are paid with the money of new clients.
So what exactly is this “Ponzi scheme” that these people are being charged with?
A Ponzi scheme is a fraudulent investment operation that pays returns to investors from their own money or money paid by subsequent investors rather than from profit.
So, according to the US government, it a crime to get people to invest money into something, then paying them back with the money from new investors, rather than from profits realized from their own original investments?
Here’s what Terry Easton had to say about Ponzi schemes in Human Events Online:
Of course, Social Security, Medicare, Medicaid and ERISA are not really true insurance programs. Unlike legitimate privately-run insurance companies, there is no reserve pool of assets to tap into when needed to pay out to future beneficiaries. The money collected in premiums is not used for investments, it’s simply used to immediately pay the current bills of earlier insured people. Contrary to what a former national politician once alleged, there (alas) is no “lock box” with a treasure trove of assets safely tucked away in the government vaults. What really exists is yet another Ponzi scheme this time made legal by government definition.
Government defines and redefines what constitutes fraud at will, making an act punishable when carried out by an individual, but not punishable when carried by the members of Congress.
Looks like the Feds are eliminating the competition when it comes to Ponzi schemes…sort of reminds me of Al Capone’s business plan.
You all remember Capone don’t you?
He was a thug from Chicago who painted himself as a public servant.
“Public service is my motto. Ninety percent of the people in Chicago drink and gamble. I’ve tried to serve them decent liquor and square games.” — Al Capone
There’s the flaw in Al’s plan. If he had just given ninety five percent of the people something, he could have run for office and gotten himself elected, instead of jailed for tax evasion.
At the very least, he was qualified to run the IRS.