Saturday, January 30, 2016

Scam absurdities: "An honest Ponzi" is still illegal (duh)

Those of you who read articles in general may recall something about MMM... If not, here's a TL;DR version:

MMM, or Mavrodi's Money Machine, is a fraud company founded by Sergei Mavrodi, his brother Vyacheslav Mavrodi, and Olga Melnikova. With its start in 1989 Sergei tried to do legit business, but was chased down for tax evasion by 1992. By 1994, Sergei had gone into financial market and with the Russian economy in hyperinflation he was promising profit of 1000% percent a year with a full-on TV campaign as well as a "free metro ride day" where they paid for EVERYBODY's metro ride for a day in Moscow.

In 1993 and 1994 it was estimated that MMM was taking in 100 BILLION rubles PER DAY for its shares. Party finally ended in Mid 1994 when tax police closed MMM for tax evasion. However, Mavrodi was able to manipulate the victims into voting him into Russian Dumas (house of representatives) by claiming government closed MMM, not him, and if they do that he'll pass measures to pay them back. Elected official was also immune from arrest. Mavrodi's run came to and end when the Dumas chose to cancel his immunity in 1995, and MMM finally declared bankruptcy in 1997.

However, Mavrodi went on to start several more scams, including "Stock Generation" (closed 2002, Mavrodi arrested and convicted 2007), MMM2011, MMM-India, and MMM-Global.

The interesting parts about MMM2011 and the last few schemes is its.... "honesty", so to speak. MMM2011 was described as...
"This is a pyramid. It is a naked scheme, nothing more ... People interact with each other and give each other money. For no reason!"  (source)
Which brings us to the "honest Ponzi"...   Is it a Ponzi scheme if the owners admits to it?

Of course it is. Does a weasel stop being a weasel by admitting it is a weasel?

Yet that's what many scammers want you to believe... that as long as they paper over any irregularities with enough disclaimers... they can't be "liable".

Is there such thing as an "honest Ponzi"? That depends on what you mean by such a thing. What fraudsters try to get you to believe is by being upfront about "this is a scheme!" it can't be fraudulent.
As I said this is an “honest” Ponzi scheme. How is this fradulent (sic) when participants know what they’re participating in and how their money is being used????? -- "Paul"
But there are multiple levels of meaning here.  A scheme can be illegal without misrepresentation... simply by violating laws that has nothing to do with how it presented itself.

In most countries, such as the US, chain letters that involve money are prohibited under postal laws and regulations. If you do it online, it becomes wire fraud, and most online money transfer services have strict policies against its use to fund such schemes. It may not be jail-worthy, but it is certainly not "okay".

For example, in Paypal's acceptable use policy it's clearly stated that
You may not use the PayPal service for activities that:
3. relate to transactions that (a) show the personal information of third parties in violation of applicable law, (b) support pyramid or ponzi schemes, matrix programs, other "get rich quick" schemes or certain multi-level marketing programs... 
But here's the real headscratcher:

Who am I hurting when I send someone 200 dollars. I can send my money to anyone I want it’s no ones business what I do with my money and if someone wants to send me 500 who’s business is it? No ones. It’s a free world and we can do what we want with our money or is that wrong of us.  -- "D Kay"
So what is D Kay saying? That he has a right to give people money, and other people have a right to give him money?

Sounds like typical "cash gifting" excuses... and that's just another name for pyramid scheme, in all 50 states of the US, and probably in your part of the world as well.

But the fundamental problem with the position is D Kay is claiming "right to be stupid". That's right... he wants the right to be as stupid with his money as he can be.

In that case, I'd suggest go buy lap dances and maybe a BJ or two (if you're a guy) or whatever makes you happy, rather than sending it to somebody you have no idea who.

At least you'd feel the lap dance and BJ up close and personal.

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