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SYSK Selects: How Ponzi Schemes Work · Stuff You Should Know

0:00
Speaker 1: How d everybody. This is Chuck here on the Ranch
0:04
Speaker 1: and How Stuff Work Studios and welcome to Saturday selects
0:09
Speaker 1: April nine, two nine. We're going way back into the
0:12
Speaker 1: archive for this one, how a Pons Schemes Will Work.
0:17
Speaker 1: And honestly, I picked this one because I believe, I
0:20
Speaker 1: believe this is the very first instance of me doing
0:23
Speaker 1: my bad Italian accent. I think it started with this episode,
0:27
Speaker 1: if I'm not mistaken, and it has since become such
0:30
Speaker 1: a part of the show, and uh, I thought I
0:33
Speaker 1: might as well repost this select episode from where it
0:36
Speaker 1: all began. And not only that, but it's a really
0:39
Speaker 1: interesting you know, it's a really interesting I'm falling into
0:42
Speaker 1: it right now. Pons schemes, very very interesting topic and
0:47
Speaker 1: um we we we get into it here we men.
0:50
Speaker 1: Let you know how to be aware of him and
0:52
Speaker 1: in the history behind it, there was a real Pons
0:54
Speaker 1: you know that, all right? Learn all about it right now, everyone,
0:57
Speaker 1: How Pons schemes work. Welcome to Stuff you should know
1:10
Speaker 1: from How Stuff Works dot Com. Hey, and welcome to
1:18
Speaker 1: the podcast. I'm Josh Clark Chuck say Hi, Hi, welcome people.
1:22
Speaker 1: This is stuff you should know. Indeed, Chuck's got his
1:26
Speaker 1: um little jug of vodka. I got my Fresca and
1:28
Speaker 1: we were ready to go. All right, Chuck, No, I
1:30
Speaker 1: don't drink vodka wire Chuck, Chuck. Do you know how
1:34
Speaker 1: we have these web blogs? Now? There's like a stuff
1:36
Speaker 1: you should know, web blog, a k A blog. Yeah, sure, yeah,
1:40
Speaker 1: if you want to be all hit or whatever. I
1:42
Speaker 1: do know how we have that because I write on
1:44
Speaker 1: it every day. I know. I was just starting a conversation,
1:46
Speaker 1: Chuck layoff. Well, yes, sorry, Um remember that post I
1:49
Speaker 1: put up yesterday that you said like you read three
1:51
Speaker 1: times and still couldn't make heads or tails of Yeah,
1:53
Speaker 1: I didn't get it. Well, there's a there's a part
1:55
Speaker 1: of it, uh, kind of the crux of the whole thing.
1:58
Speaker 1: I don't know if that's the case or not, but anyway,
2:00
Speaker 1: there's an aspect of it. And it was about these um,
2:03
Speaker 1: these two artists and um, well one of them just
2:06
Speaker 1: goes by the name Arakawa, right, and his partner, and
2:11
Speaker 1: I don't think just artistic partner. I think I think
2:13
Speaker 1: that their life partners. Maybe her name is Madeline Gins, right,
2:20
Speaker 1: and they have been quite successful at creating this architecture. Um,
2:25
Speaker 1: that's intended to achieve immortality, right, how so well, the
2:29
Speaker 1: way these two have done it is um by through surprising,
2:33
Speaker 1: disturbing architectural choices. Right. Basically, their theory is that if
2:40
Speaker 1: you create or if you live in an uncomfortable dwelling,
2:43
Speaker 1: um discomfort or comfort leavest the laziness and sedentariness, and
2:49
Speaker 1: then that's ultimately what kills you. Holly unproven, but they
2:53
Speaker 1: designed their architecture based on that theory, so they keep
2:56
Speaker 1: you uncomfortable, and uh, it's unfamil Earlier, I think I
3:00
Speaker 1: know this. I think we actually have an article on this,
3:03
Speaker 1: Like the floors are undulating, undulating floors and uh yeah,
3:07
Speaker 1: I've heard of that. They also like um kind of
3:09
Speaker 1: moonscape floors, um angled like ceilings. That just it doesn't
3:15
Speaker 1: sound like a very pleasant place to live. Pretty interesting
3:17
Speaker 1: that this one guy and these things go for there
3:19
Speaker 1: there just to build them, they cost millions of dollars,
3:22
Speaker 1: but they have built several. Most of them are lofts
3:25
Speaker 1: in in Tokyo. And this one guy who lives in
3:28
Speaker 1: one with his family said that he's lost like twenty
3:30
Speaker 1: pounds and doesn't have hay fever any longer since he
3:33
Speaker 1: moved in there. Yeah. Um, but there their their whole
3:38
Speaker 1: firm is basically in jeopardy because they were heavily invested
3:42
Speaker 1: with one Bernard made Off, who you may may have heard.
3:45
Speaker 1: This guy's reach extends everywhere. We're talking Kevin Bacon, right,
3:50
Speaker 1: and there's a six degrees joke in there somewhere. Um,
3:53
Speaker 1: I imagine Kiras Sedgewick, since Kevin Bacon is in there,
3:56
Speaker 1: Jaja Gabor, Spielberg, Spielberg, and that's just like the tip
4:01
Speaker 1: of the iceberg, right, I mean, thousands and thousands of
4:03
Speaker 1: people were invested with this guy and it turned out
4:07
Speaker 1: he was a Ponzi schemer. That's right, it's a Ponzi scheme. Yeah,
4:11
Speaker 1: Chuck likes to say it like that in a tribute
4:13
Speaker 1: to the Italian immigrant Mr Charles Ponzi, who was running
4:19
Speaker 1: around in the twenties. And actually, yeah, you want to
4:22
Speaker 1: talk a little bit about Mr Ponzi. Yeah, I didn't
4:25
Speaker 1: know this until I read the article. Is pretty interesting,
4:27
Speaker 1: and you know, Ponce's all over the news, so it's
4:29
Speaker 1: kind of cool to get some background. Yeah. Oh, and
4:30
Speaker 1: also we should probably say thanks to all the people
4:32
Speaker 1: who wrote in and requested that we do this podcast, right,
4:35
Speaker 1: this one's for you, right. Bernie Madoff made off excuse
4:38
Speaker 1: me himself wrote in yeah he did. He's like, hey,
4:40
Speaker 1: can you tell everybody what I did? So, yeah, in
4:43
Speaker 1: the nineties, Charles Ponse. What he did was at the
4:47
Speaker 1: time there was if you want to send mail overseas,
4:50
Speaker 1: you would include what was called an international reply cupon
4:54
Speaker 1: well if you wanted to reply, right. But it's basically
4:56
Speaker 1: sort of like, uh, when you get something from you know,
4:59
Speaker 1: mag magazine and the postage is prepaid to return the card,
5:02
Speaker 1: you know, right, it's it's prepaid so that you get
5:05
Speaker 1: that back to say, hey, these people got that exactly right,
5:08
Speaker 1: So this is what you did back then. Uh. He
5:11
Speaker 1: had an idea. He said, hey, if I go over
5:14
Speaker 1: and buy these in a different country where they're cheaper,
5:17
Speaker 1: I can come back and sell them in the United States, right,
5:19
Speaker 1: And he could do this because these things were internationally recognized.
5:22
Speaker 1: There were same in any country, but apparently they went
5:25
Speaker 1: for different prices in different countries. Right, So it's not
5:27
Speaker 1: a bad business model, right, right, I would say so right. Uh.
5:30
Speaker 1: And things went pretty well at first. He got a
5:32
Speaker 1: lot of investors and made some pretty good money, but
5:35
Speaker 1: the return that he promised, which what was it again,
5:37
Speaker 1: It was a ridiculous promise. It was I think return
5:41
Speaker 1: in forty to ninety days. So yeah, that should have
5:44
Speaker 1: been a red flag right then. We'll talk about that later.
5:47
Speaker 1: But yeah, that didn't go as well as he thought. Um,
5:50
Speaker 1: but he kept getting investors and he just kind of
5:52
Speaker 1: kept this all quiet. So what he would do is
5:54
Speaker 1: he would payback some to the initial investors based on
5:57
Speaker 1: the money that the current investors were giving him, and
6:01
Speaker 1: just kind of kept going in a cyclical way until
6:04
Speaker 1: he had a lot of He started you know, taking
6:06
Speaker 1: a little money for himself too, and uh ended up
6:08
Speaker 1: having you know, millions of bucks off this in the
6:10
Speaker 1: nineteen twenties before it finally crumbled. Um as a big scam. Well,
6:15
Speaker 1: the reason he was found out was because somebody apparently
6:18
Speaker 1: calculated that, um, there would have had to have been
6:22
Speaker 1: about a hundred and sixty million of these things extant
6:25
Speaker 1: for him to be making the money he was making,
6:27
Speaker 1: and the problem is that there was only twenty seven
6:29
Speaker 1: thousand exactly. That's that's kind of what found him out.
6:32
Speaker 1: But what I got from this, what I got from
6:34
Speaker 1: reading about Ponzi schemes, is that, Um, Charles Ponzi didn't
6:38
Speaker 1: appear to be a huckster from the outset, like this
6:42
Speaker 1: is actually a legitimate business that he was trying to run. Sure,
6:47
Speaker 1: I think it was an act of desperation. Um, And well,
6:51
Speaker 1: we should probably talk about exactly how Ponzi schemes work. Right,
6:54
Speaker 1: they're pretty straightforward and simple. But I can't imagine that
6:57
Speaker 1: as they just get bigger and bigger, you start to
7:00
Speaker 1: eat a lot of role aids. Right. I bet that
7:03
Speaker 1: that was the original Ponzi scheme, and I'm sure he
7:05
Speaker 1: was nervous as it was going. What kind of scheme?
7:08
Speaker 1: Pons a scheme? Very nice, Chuck, So do you want
7:11
Speaker 1: to give some detailed explanation on how Ponzi schemes work? Yeah,
7:15
Speaker 1: it's actually pretty simple. What you do is you, um,
7:20
Speaker 1: you come up with a investment a shell sort of,
7:24
Speaker 1: and you get people to invest in your in whatever
7:27
Speaker 1: you're saying you're gonna invest in. In this case, and
7:30
Speaker 1: in the original Ponti scheme, it was these reply coupons,
7:34
Speaker 1: but nowadays it's usually like a stock thing. So you
7:55
Speaker 1: get these folks to invest and you take their money
7:57
Speaker 1: and essentially, UH use that first rung of people to
8:02
Speaker 1: attract other people to invest. And once you start getting
8:05
Speaker 1: other investors, you can pay back those initial folks and
8:08
Speaker 1: they can go on record and say, oh, yeah, you know,
8:10
Speaker 1: I made a great return. That's exactly right. And then
8:12
Speaker 1: that even more investors right, and more wrongs, and you
8:16
Speaker 1: just kind of it's sort of like robbing Peter to
8:18
Speaker 1: pay Paul the entire time, right, but you're pocketing like
8:22
Speaker 1: Ponzi did some for himself. Right. At a certain point
8:24
Speaker 1: you can start skimming off the top, right, And but
8:26
Speaker 1: it's not like it take the money and run proposition.
8:28
Speaker 1: It's the take of the money, stick around and pay
8:31
Speaker 1: people off as much as you can. The problem is
8:33
Speaker 1: is to like, people don't divest very easily. When they
8:37
Speaker 1: get a better and unbelievable return on something, they want
8:41
Speaker 1: to keep investing. Sure, So if you're like, no, no,
8:42
Speaker 1: you can't invest anymore, the people are going to start
8:45
Speaker 1: to get suspicious. So you've got your first wrong, you've
8:48
Speaker 1: got your second wrong, and then so on and so
8:50
Speaker 1: on and so on. But to sustain it, you have
8:52
Speaker 1: to keep adding more and more wrongs. But the more
8:54
Speaker 1: wrongs you add, more difficult it is to pay everybody back,
8:58
Speaker 1: so it's inevitable that collapses. But as some people will
9:01
Speaker 1: know they're investing in a Ponzi scheme, some of those
9:04
Speaker 1: first wrong people. Yeah and yeah, from what I understand,
9:08
Speaker 1: people can actually make money off Ponzi schemes. You get
9:10
Speaker 1: in early enough, and you're smart enough to get out
9:12
Speaker 1: while it getting is good because those are the people
9:14
Speaker 1: are gonna get paid first, so they can vouch and
9:16
Speaker 1: say this is a really great deal, right exactly? So yeah, sure, yeah,
9:20
Speaker 1: So the whole that's that's pretty much a Ponzi scheme.
9:22
Speaker 1: And if it sounds a lot like a pyramid scheme
9:24
Speaker 1: to you, you would be right. Uh, it's virtually the
9:27
Speaker 1: same structure. The one big difference is is that in
9:30
Speaker 1: a Ponzi scheme, you're not asked to do anything. You're
9:33
Speaker 1: just an investor. They just want your money. Uh. In
9:35
Speaker 1: a pyramid scheme, generally you have to do something like
9:38
Speaker 1: you are buying in uh to sell something? Sorry? Well no, actually, UM.
9:44
Speaker 1: On Amway site they have uh like on the f
9:47
Speaker 1: a Q section it's like, is am Way a pyramid scheme?
9:50
Speaker 1: And they're like where a pyramid model schemes? The wrong
9:54
Speaker 1: word to use and Actually, the pyramid model has worked
9:58
Speaker 1: for legitimate businesses Am Wai, Mary kay Um paper Chef,
10:03
Speaker 1: pamper Chef. That's another one. So yeah, So I mean
10:06
Speaker 1: it can work and it doesn't necessarily have to be illegal.
10:10
Speaker 1: That that that's the other distinction between Ponzi schemes and
10:13
Speaker 1: um pyramids models is that ponzi schemes are always fraud
10:19
Speaker 1: completely false because it's an investment, but the money's never invested.
10:23
Speaker 1: So it's so simple. When I read this, I was
10:25
Speaker 1: just like, it's the beauty is in its simplicity, Just like,
10:28
Speaker 1: give me a bunch of money and I will keep
10:30
Speaker 1: it and get more people to give me money. I'll
10:33
Speaker 1: give you a little bit, and it's just amazing how
10:35
Speaker 1: that works. Can you imagine being such an edgy, savvy
10:38
Speaker 1: investor that you actually knowingly invest in ponzi schemes? Who
10:42
Speaker 1: does that? I don't know. I bet there's some names
10:45
Speaker 1: on the on the Made Off List. Yeah, I'm bet
10:48
Speaker 1: I'll bet um. But no, he did everything alone. We'll
10:50
Speaker 1: get to him in a minute. Allegedly still more, he confessed, buddy, Well,
10:54
Speaker 1: we're certain things are still alleged at this point. All right, Well,
10:57
Speaker 1: we'll just go with it. You're such a c O
10:59
Speaker 1: A dude. But I appreciate the oh because that includes me. UM.
11:04
Speaker 1: So Ponzi wasn't the guy who came up with a scheme.
11:06
Speaker 1: He he did it so well that they named it
11:10
Speaker 1: after him. But the earliest one we know about goes
11:13
Speaker 1: back to, UH eighteen eighty early eighteen eighties in Boston
11:17
Speaker 1: with a woman named Sarah Howe. I don't think I
11:20
Speaker 1: know about this one, okay, So she actually actively and
11:24
Speaker 1: purposefully built a Ponzi scheme, although you know what, with
11:28
Speaker 1: it being forty years before Charles Ponzi showed up, she
11:31
Speaker 1: probably didn't call it that to herself. What was her name?
11:33
Speaker 1: How Sarah how the how scheme? Yes, if she were,
11:37
Speaker 1: if she did have enough foresight to know that it
11:39
Speaker 1: would eventually be called a Ponzi scheme, how would it
11:42
Speaker 1: sound in her head when she said, this is the
11:44
Speaker 1: kind of scheme that I'm carrying out. It's a scheme? UM? Anyway,
11:50
Speaker 1: Miss Howe basically put together a UM, a group of
11:55
Speaker 1: thousands of women investors and UH invested in women's UM
12:00
Speaker 1: Women's Liberty bonds, I think is what they were called. UH.
12:04
Speaker 1: That's supposedly what the investment was for. But no, it wasn't.
12:08
Speaker 1: She just basically carried out a Ponzi scheme um and
12:11
Speaker 1: she managed to rake in about half a million bucks
12:14
Speaker 1: before she was caught. Uh. And then another guy shortly after,
12:19
Speaker 1: about the turn of the century. His name was William
12:22
Speaker 1: Franklin Miller, and he also builked investors for about another
12:26
Speaker 1: half a million. And this is, you know, substantial enough
12:29
Speaker 1: to be remembered a hundred years plus later. But Ponzi
12:33
Speaker 1: was the first one, right, Ponsi was the first big one,
12:36
Speaker 1: I should say. Uh. And then you don't really hear
12:38
Speaker 1: about anybody in in the world of Ponzi schemes. I mean,
12:41
Speaker 1: I'm sure you can, but nobody huge doing it right now,
12:45
Speaker 1: well until Lou Pearlman. Is that where you're going? I
12:49
Speaker 1: was going to go to the Balkans first blist to
12:51
Speaker 1: Mr Pearlman. Okay, Yeah, this is one of my favorites,
12:53
Speaker 1: just because his associations are kind of funny. H Lou Pearlman,
12:56
Speaker 1: who I think you have to say his name like
12:58
Speaker 1: Lou Pearlman. That's how I got that impression as well.
13:01
Speaker 1: And he kind of looks like that kind of guy too. Yeah,
13:03
Speaker 1: he was. Uh, he kind of funded the boy band
13:06
Speaker 1: craze in the nineties. I know, you remember the Backstreet
13:08
Speaker 1: Boys because of the tattoo you have on your neck,
13:11
Speaker 1: and uh, in Sync was the other one. I don't
13:14
Speaker 1: know if you have a tattoo of instinctly, okay, I
13:16
Speaker 1: was covering all my bases. Uh. So he funded these bands. Uh,
13:19
Speaker 1: And it turned out in two thousand and six that
13:22
Speaker 1: he was running a big Poncey scheme. He had been
13:25
Speaker 1: for like twenty years, right, and a lot you know,
13:27
Speaker 1: in Sync and the Backstreet Boys were kind of funded
13:29
Speaker 1: on this Poncey schemes. I don't think funded kind of
13:32
Speaker 1: at all. I think they were fully fully funded, right, Yeah.
13:34
Speaker 1: And this this guy created the Backstreet Boys and in
13:37
Speaker 1: Sync and funded him with illegal money. So those yahoo's
13:40
Speaker 1: kind of oh ponce with their careers, yes they do. Yeah,
13:44
Speaker 1: well their careers past tense, right sure? Um, timber Lakes
13:49
Speaker 1: done well for himself. Was he in one of those
13:51
Speaker 1: who j T I don't know who that is? Shut up? Um?
13:55
Speaker 1: All right, Back to Albania. Yes, Albania. Basically a whole
14:00
Speaker 1: bunch of people were working this big Ponzi scheme, which
14:02
Speaker 1: from what I understand also, UH can extend the life
14:05
Speaker 1: of a ponzi scheme, h. Lou Perlman is an unusual animal, uh,
14:10
Speaker 1: and that he could carry it out single handedly for
14:13
Speaker 1: twenty years. Um. But in Albania, for a while a
14:17
Speaker 1: group of ponzi schemers UM had one set up that
14:21
Speaker 1: builked these investors out of two billion dollars before it collapsed,
14:27
Speaker 1: which is in Albania, that is thirty of their gross
14:30
Speaker 1: domestic product. That's huge, Like how to cripple a country?
14:35
Speaker 1: Yeah yeah, and yeah, so yeah, I think Albania is
14:38
Speaker 1: probably second world. Um. So, I think a hit like
14:41
Speaker 1: that is just ginormous. And that was a big problem
14:44
Speaker 1: when it happened. It was because when people found out,
14:46
Speaker 1: they started riding in the streets and fires broke out
14:49
Speaker 1: and people died. Yeah. Yeah, so that's the Albania, the
14:52
Speaker 1: old Albania ponzi scheme. And we should note that Lou
14:56
Speaker 1: Parliaman he went to jail or received a sentence of
14:59
Speaker 1: twenty five years for conning three hundred million dollars, and
15:04
Speaker 1: apparently every million he paid back they cut a month
15:06
Speaker 1: off the sentence, which seems really fair, I think so.
15:09
Speaker 1: But Pearlman three million dollars sounds like a lot, it
15:12
Speaker 1: ain't it was. And then two thousand and eight came
15:15
Speaker 1: along the big daddy dude, this guy Bernard made Off,
15:20
Speaker 1: one of the founders of Nasdak. Yeah, which is one
15:24
Speaker 1: reason why it works so well, because he was beyond
15:26
Speaker 1: legit He was beyond legit um. Although he his One
15:33
Speaker 1: of the other reasons he was so successful was that
15:35
Speaker 1: he was smart. First of all, like Sarah, how he
15:39
Speaker 1: used affinity fraud. An affinity fraud is where you are bilking.
15:44
Speaker 1: You're you're using the inclusiveness of a of a group
15:48
Speaker 1: to um against themselves, right, So he uh used his
15:52
Speaker 1: membership in a a uber wealthy, very exclusive Jewish country
15:56
Speaker 1: club down in Florida to prey on investors at for um.
16:01
Speaker 1: And you know, the affinity fraud happens a lot like
16:04
Speaker 1: and usually it happens with religious groups. Somebody comes in,
16:06
Speaker 1: it's like, hey, I'm a Lutheran two and I've got
16:08
Speaker 1: this great investment. Since he's a Lutheran, you know, he
16:11
Speaker 1: seems upstanding, you trust him, and then that's that. But
16:15
Speaker 1: made Off very much used affinity fraud, at least at first,
16:19
Speaker 1: and then news of his amazing returns got out. But
16:22
Speaker 1: as I was saying, the reason he was so successful
16:24
Speaker 1: is he didn't pull a Ponzi and say I'll get
16:27
Speaker 1: you fifty percent return in forty five days. You know, Uh,
16:30
Speaker 1: he offered reasonable I think eleven percent was the average
16:35
Speaker 1: returns over the long haul, right, That was the key.
16:38
Speaker 1: It was very believable. Well to an extent. Have you
16:40
Speaker 1: ever looked at our prospectus, the t row price prospectus
16:44
Speaker 1: or prospectus? Yeah, have you ever noticed, like if you
16:48
Speaker 1: look at it's like one year, three years, five years,
16:50
Speaker 1: ten years, and it'll be up at one year down,
16:53
Speaker 1: three years down, five years up. He was offering like
16:56
Speaker 1: a straight even kill eleven percent return. You couldn't lose, right,
17:01
Speaker 1: So that actually should have been a red flag, but
17:03
Speaker 1: it wasn't. Right um. And in two thousand one, Barons,
17:07
Speaker 1: the Financial rag they published a an article on him
17:12
Speaker 1: specifically was saying made Off can't be offering these returns
17:18
Speaker 1: mathematically speaking, this isn't possible. And no one listened. But
17:23
Speaker 1: chief among the people who weren't listening was the SEC. Yeah,
17:26
Speaker 1: and they've been under a lot of fire lately because
17:28
Speaker 1: they did not listen. They did not investigate, even when
17:31
Speaker 1: it was kind of handed to them, like hey, several times,
17:34
Speaker 1: actually they were like two or three formal complaints to
17:38
Speaker 1: them and they never followed up. Well. One reason why,
17:40
Speaker 1: and this is even another reason why he was successful,
17:43
Speaker 1: is he was also running a legit business alongside it,
17:46
Speaker 1: so he could sort of defer, you know, when he
17:49
Speaker 1: needed to pay people back and things were getting tight,
17:51
Speaker 1: he could pull a little money out of his legit
17:52
Speaker 1: business and do that, and apparently did so promptly if
17:55
Speaker 1: somebody wanted to um withdrawal. Yeah, they got to check
17:59
Speaker 1: like that. Questions asked, Like when Kevin Bacon was like,
18:02
Speaker 1: we're heading to Barbados and I need a million dollars
18:05
Speaker 1: because I'm gonna buy a hut on the beach, right,
18:07
Speaker 1: I'm trying to hide my wife from her shame for
18:10
Speaker 1: being in the closer right Yeah. Um so yeah, made
18:35
Speaker 1: off was very, very successful, to the tune of fifty
18:38
Speaker 1: billion dollars he made off with. I know he's got
18:42
Speaker 1: the perfect name for him. I should have been like, wait,
18:44
Speaker 1: what's your last name? No, I'm not investing. Every headline
18:46
Speaker 1: has already used that, so that's probably stale by now. Yeah,
18:49
Speaker 1: thanks for that. Chuck. So what can you do, Chuck?
18:51
Speaker 1: How do you stay out of a Ponzi scheme unless
18:53
Speaker 1: you're a very savvy investor who's totally unconscionable. Well, uh,
18:57
Speaker 1: there's a few things you can look for, um, And
19:00
Speaker 1: and it also should be noted that a Ponzi scheme
19:03
Speaker 1: is pretty much a one way street to collapse. There's
19:07
Speaker 1: really no way to pull it off in the long
19:08
Speaker 1: run sustainable unless I think a lot of people might
19:11
Speaker 1: start these and think, well, I can get out at
19:12
Speaker 1: a certain point, pay everyone back and make a lot
19:14
Speaker 1: of money. Um. But yeah, it's it's not a good
19:17
Speaker 1: working model in the end. Well, apparently the point to
19:19
Speaker 1: a ponzi schemers to keep it going until they die, Yeah,
19:23
Speaker 1: which is considered a big success because you live like
19:25
Speaker 1: a billionaire and then uh, at the end, you know,
19:28
Speaker 1: you die or you know, you off yourself. Speaking of that,
19:33
Speaker 1: did you know that um, after he was found out
19:36
Speaker 1: made Off was spending a hundred and sixty grand a
19:39
Speaker 1: month on personal security at its penthouse. Yeah. Do you
19:45
Speaker 1: know how many in Manhattan? Do you know how many bodyguards?
19:47
Speaker 1: That buys you? That's like Delta Force money? Yeah? Yeah,
19:52
Speaker 1: uh so yeah, some things you can look for. Um.
19:54
Speaker 1: The obvious of course is if it sounds too good
19:58
Speaker 1: to be true, it is. That's the oldest edge in
20:00
Speaker 1: the book, and it's true across the board. Uh So
20:03
Speaker 1: someone's making you promises on big returns, then you should
20:07
Speaker 1: probably turn around and walk away. Don't let anyone pressure
20:10
Speaker 1: you into doing well. Pressure. That's another point too, is
20:13
Speaker 1: I mean, it's usually going to be a high pressure pitch,
20:15
Speaker 1: like you have a very limited time window, maybe for
20:18
Speaker 1: as long as the person standing there, um, and you're
20:20
Speaker 1: made to feel like a jackass if you don't take
20:22
Speaker 1: them up on it. Um. But yeah, yeah, pressure is
20:26
Speaker 1: definitely one one of the factors. And even one like
20:30
Speaker 1: you said that uh like made off scam where he
20:34
Speaker 1: would not promise huge returns, that might make it a
20:37
Speaker 1: little more believable. But everything, like you said, fluctuates, So
20:41
Speaker 1: if it's a consistent even if it's a consistent like
20:43
Speaker 1: five growth for years, then that should be a red
20:47
Speaker 1: flag right there. And also you should um ask questions
20:51
Speaker 1: and and demand answers as well, because I mean, if
20:54
Speaker 1: you're just if you have a friend who has a
20:56
Speaker 1: friend that has this great investment and you cut him
20:59
Speaker 1: a check and it turns out to be a Ponzi scheme, Well,
21:01
Speaker 1: t s for you. That was a stupid thing to do.
21:04
Speaker 1: You should know what your money is being invested in.
21:06
Speaker 1: You should know who's investing it. You should and even
21:09
Speaker 1: if it's legitimate, you should be asking these questions if
21:12
Speaker 1: it's through any of the major brokerages, but not how
21:15
Speaker 1: many fees there are. Just just that's a good habit
21:17
Speaker 1: no matter what. Uh. And the other thing is um
21:21
Speaker 1: even if you're involved in a Ponzi scheme, even if
21:24
Speaker 1: you get sucked in, you should never it should never
21:27
Speaker 1: break you and leave you bankrupt. Excellent point, Chuck, because
21:30
Speaker 1: this is probably the most important important point. Well. And
21:33
Speaker 1: they always say diversification is a key to a good portfolio,
21:35
Speaker 1: and this is definitely true here. You should not invest
21:38
Speaker 1: all your money in one thing. You're just setting yourself
21:41
Speaker 1: up for for bankruptcy. And whether it's a Ponzi scheme
21:44
Speaker 1: or not. Because you do all real estate and you're
21:46
Speaker 1: just totally invested in real estate in two thousand and seven,
21:49
Speaker 1: you're in big trouble. I mean, even Donald Trump uh
21:53
Speaker 1: hit the lowest of the lows. At one point. We
21:55
Speaker 1: all forget I think he's lost a lot of his
21:57
Speaker 1: old edge that he used to have. He's made some
22:00
Speaker 1: had decisions like the TV show. Sure, no one needs
22:03
Speaker 1: to see that, you know. And if you if you
22:05
Speaker 1: do find yourself in a Ponzi scheme and you're not
22:08
Speaker 1: the type to take the law into your own hands
22:10
Speaker 1: with like a tire iron or anything like that, you
22:12
Speaker 1: could always contact the SEC. I don't know that they'll
22:15
Speaker 1: do anything, and they probably won't, but it's worth a
22:17
Speaker 1: shot anyway, right right, Oh, when we should Just as
22:19
Speaker 1: a sidebar here, I know that made Off did confess,
22:22
Speaker 1: but they are there's a SEC is still coming under
22:26
Speaker 1: fire because he's claiming that he acted alone and didn't
22:30
Speaker 1: have any help with this is which is really really
22:32
Speaker 1: hard to believe just because paperwork alone. First scheme this
22:36
Speaker 1: size would be huge, and uh, some people think out
22:40
Speaker 1: there that he probably had his family involved and then
22:43
Speaker 1: did everything he could to cover for them and take
22:45
Speaker 1: the hits but yet to come out well as even
22:47
Speaker 1: if they weren't involved, their salary came directly from the
22:50
Speaker 1: bilking of other people, even if they somehow we're just
22:53
Speaker 1: totally unaware of it, you know, it makes it kind
22:56
Speaker 1: of I don't know it puts it puts their own
22:59
Speaker 1: wealth in question, right. So yeah, so that's the Ponsi schemes.
23:02
Speaker 1: That was very good, Chuck. Thank you, Chuck. The last
23:04
Speaker 1: time I'll say that, are we Are we going to
23:06
Speaker 1: talk about our spoken word album? Yes? Yeah, and then
23:10
Speaker 1: maybe we'll talk about blogs and then listener mail stick
23:13
Speaker 1: around first, all right, So we do have a spoken
23:16
Speaker 1: word album, our first one, and it is about the
23:19
Speaker 1: economy and economics. Everyone knows that we are in the
23:23
Speaker 1: second Great Depression, and um, we just kind of decided
23:28
Speaker 1: to make a spoken word album about that. That's that's
23:32
Speaker 1: such a an off a slightly off kilter description. It's
23:38
Speaker 1: more like a guide, right, right, possibly a guide to
23:42
Speaker 1: the economy, that's what it's called. But it's very big, right,
23:45
Speaker 1: Like there's a lot of stuff in it, right, Yes,
23:47
Speaker 1: it's called the Stuff you should know, super Stuffed got
23:50
Speaker 1: to the economy, and it's got expert interviews. Josh and
23:53
Speaker 1: I get out of the studio, we go in uh
23:56
Speaker 1: around the working Farm, chicken farm, don't spoil it. And
24:00
Speaker 1: Jerry are awesome producer. She did excellent sound design and
24:03
Speaker 1: it's got more bells and whistles and it's it's definitely
24:06
Speaker 1: a cut above the silliness we do here each week. Yeah. Yeah,
24:09
Speaker 1: And you can find it by typing a super stuffed
24:14
Speaker 1: in the search bar at iTunes. It's three frankly chuck,
24:18
Speaker 1: and I think it's worth it. I think so. So
24:19
Speaker 1: if you want to get it, knock yourself out, get
24:22
Speaker 1: it a couple of times if you like support us, Yeah,
24:24
Speaker 1: because it blows up your computer after forty eight hours,
24:27
Speaker 1: so unless you keep downloading it fresh each time, and
24:30
Speaker 1: I'm paying for it over and over again, not sure
24:32
Speaker 1: at all. All right, So there was that plug that
24:35
Speaker 1: was plug the blog. Yes, we've been plugging the blog now.
24:37
Speaker 1: I hope you guys aren't sick of it yet. Um,
24:39
Speaker 1: but Josh and I blog a couple of times a day.
24:41
Speaker 1: He post once, I post once, and it's called stuff
24:45
Speaker 1: you should know. You can find it on the right
24:47
Speaker 1: hand side of our homepage at House of Works dot com.
24:50
Speaker 1: And we just cherry pick interesting news items and kind
24:53
Speaker 1: of like what we do here, except it may not
24:55
Speaker 1: be enough to flesh out a full show. So yeah,
24:58
Speaker 1: and a couple of times we've we've post sit on
25:01
Speaker 1: listeners suggestions like why don't you guys do this absolutely. Um,
25:04
Speaker 1: So yeah, keep keep the ideas coming. We love them.
25:07
Speaker 1: We do it keeps us from having to do any
25:09
Speaker 1: real research, is true, and you know what, that leads
25:12
Speaker 1: us to listener mail time. That's right, Okay, Josh, this
25:18
Speaker 1: is an installment of stuff we should know, stuff we
25:21
Speaker 1: should have known. No, it's not, because sometimes it's additional things.
25:26
Speaker 1: Quit saying that. This one is from Sarah, and Sarah
25:29
Speaker 1: wrote in UM about the word theory versus hypotheses. Sarah
25:35
Speaker 1: is a teacher, and we say all the time, someone's theory,
25:39
Speaker 1: someone's theory, and she says, we've been misusing it. She says,
25:43
Speaker 1: in the thinking Cap podcast you repleted, you repeatedly referenced
25:46
Speaker 1: theories about savantis um and left hemisphere damage, and scientifically speaking,
25:52
Speaker 1: these are not theories, their hypotheses. So her basic point
25:55
Speaker 1: is that a theory is not just an educated guess.
25:58
Speaker 1: It's uh something that a lot of detail and research
26:02
Speaker 1: has gone into to get to the point where you
26:03
Speaker 1: can call it a theory, like the theory of evolution,
26:06
Speaker 1: which is often dismissed as oh, it's just a theory,
26:09
Speaker 1: but a theory has actually got a lot to it.
26:12
Speaker 1: So Sarah wanted us to set the record straight, so
26:15
Speaker 1: we did that. Another little minor correction here. Josh said
26:19
Speaker 1: at one point we were the only country that uses
26:22
Speaker 1: UH the imperial system. I thought we got this out
26:25
Speaker 1: of the way with the bodies on Everest Podast. We
26:28
Speaker 1: did not officially U s Burma, Liberia and Myanmar. Myanmar
26:33
Speaker 1: and Burma are the same place. Okay, well do you
26:36
Speaker 1: have it ever since the junta? It's now me and
26:38
Speaker 1: mar look at you. So rich from Omaha, Joshua from you,
26:43
Speaker 1: Claire Wisconsin, Stephen from Newark, Delaware, and Jeanne or Gene Gene.
26:50
Speaker 1: They all wrote in and told us that, and I
26:52
Speaker 1: have one more and I like this one. Stephanie wrote
26:54
Speaker 1: in and told us that on our afrodsix podcast, we're
26:57
Speaker 1: talking about UH phallic symbol and fallacies, and we were
27:00
Speaker 1: talking about an oyster. Apparently there is a word for
27:04
Speaker 1: something that resembles the female geniti. Yeah. I was interested
27:07
Speaker 1: to hear this because we kept saying female genitalia. And
27:09
Speaker 1: I wish that she had written in before then. And
27:11
Speaker 1: we knew that phallus only represented the male genitalia, but
27:15
Speaker 1: I did not realize there was one for female Yannick
27:19
Speaker 1: y o n I see And she said, Yannick or
27:21
Speaker 1: Yanni is Sanskrit for the word womb vulva in place
27:25
Speaker 1: of origin. And she said she just want to tell
27:28
Speaker 1: us this because for one of the first times in
27:29
Speaker 1: her life she actually knew something Yonick. So thank you
27:32
Speaker 1: Stephanie for the Yeah, thanks Stephanie, Nick, I'm getting it.
27:35
Speaker 1: I'm processing it right now. So, Yanni, can I remember
27:37
Speaker 1: the famous tennis player, Yeah, I knew was actually a
27:41
Speaker 1: reference to female genitalia. I wonder if he knows that.
27:44
Speaker 1: I'm sure it's her time, truly. But now, so, if
27:47
Speaker 1: you want to point out that there are other words
27:49
Speaker 1: Chuck and I are unfamiliar with, basically, let me know
27:53
Speaker 1: that I shouldn't call my crackpot theories theories, but hypotheses instead,
27:58
Speaker 1: or just say hi. You can send us an email
28:00
Speaker 1: to Stuff podcast at how stuff works dot com. For
28:08
Speaker 1: moralness and thousands of other topics, visit how stuff works
28:11
Speaker 1: dot com. M hmm,