Monday, November 27, 2006

Why So Many “Emerging Affluents” Never Emerge

Google the news for "ponzi scheme." A whole bunch of items pop up, reporting on Ponzi schemes from hither and yon, each in some stage of investigation, prosecution or recrimination.

Yesterday's New York Times took a long look at the phenomenon. Hard to write much new about the urge to get rich quick and the costly consequences. Still, it's good to be reminded of the basics:

• Ponzi's heirs can tailor a scheme to trap people from any walk of life or education level.

• Many Ponzi schemes are "affinity frauds," perpetrated in clubs, churches or other groups where one "client" will quickly tell friends about the chance for easy money.

• Victims of Ponzi schemes never heard of diversification. If they have a $125,000 inheritance or $575,000 needing investment, it all goes to the scheme. All of it!

Carlo Ponzi, your name will live on until human nature changes.

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