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Read the Blog Economics, Politics, Legalities, Ethics and Sociology of Pyramid Schemes / Multi-level Marketing. |
FINLAND TAKEN IN BY MADOFF-STYLE PONZI SCHEMEAugust 2009 But, the original model, created by Ponzi himself remains active. Finland has recently discovered that thousands of its citizens were duped in one of them, a near clone of Charles Ponzi's original scam and a close relative of Bernad Madoff's The scam in Finland was originaially called WinClub, but after some negative publicity and inquiries, changed its name to WinCapita. The scheme ran for more than three years with no goverenment or media investigations, just as Madoff did. In October 2008, the scheme attracted attention only when its website closed down and the promoter disappeared. Authorities now estimate that the scheme took in as much as one hundred million Euros (about $140 million US dollars) and as many as 10,000 Finns had invested in the scam which equates to as many as 1 out of every 200 households (proportionately, this would equate to over 550,000 households in the USA). A typlical investment was about 10,000 Euros, but some people invested much more. One person reportedly invested one million Euros. Other investors were in Sweden and some in Russia as well. The promoter has now been arrested as well as one accomplice but only a fraction of the total amount invested has been recovered. Like all Ponzi's, WinCapita simply recycled money from later investors to earliers ones. Like all Ponzis, it had a cover story for how it produced profits. The scheme promised investors as much as 400% return. It claimed these extroardinary profits came from currency trading and speculation. In fact, authorities can find no evidence that the scheme ever engaged in even one currency exchange transaction. WinClub/WinCapita paid existing investors bonuses of 20% to recruit other investors. News reports state that the scheme had strength in smaller towns and that respected people, some in political leadership positions, had joined, which added credibility to the scheme. |
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