When it comes to Ponzi schemes, it always amazes me how seemingly intelligent and well-educated people can fall prey to them. (At least, you’d assume that anyone who’s made a sizable chunk of money has a basic level of intelligence when it comes to how it is invested.) It’s a question I’ve thought enough about through the years that I’ve come up with a three-pronged answer: Promise. Illusion. Trust.
Or, what I like to call “the PIT.”
The PIT formula pretty much explains nearly every Ponzi scheme that hits the headlines. The recent case of Richard Monroe Harkless, a 65-year-old man from Riverside, Ca., who caused more than $39 million in losses among hundreds of investors, is no different. Let’s break it down.
Promise: Backed by the claim that he had guaranteed, government-backed contracts, Harkless promised investors returns of up to 14 percent every two to three months. Reality check: No one — absolutely no one — makes that kind of money. So, how could so many people believe that kind of promise? That brings us to: Illusion.
Illusion: At this point, the criminal creates the illusion that investors will, in fact, get what they were promised. In Harkless’s case, he created promotional literature. (Again, amazing how people can fall for something that may have been printed at a local Kinko’s.)
Trust: Ask yourself. If you got returns of 14 to 16 percent every two to three months, would you walk away? Probably not. Neither did Harkless’s investors. In fact, as the money kept rolling in, many signed up friends and family, widening the web of trust.
An open letter to Harkless’s victims: Help us paint the picture!
Recently, Harkless was sentenced to 100 years in prison for causing, what United States District Judge Virginia A. Phillips called, “every kind of grief and loss imaginable.”
But the story isn’t over. Not for the victims. And not for future victims like them.
To help offset future stories like this, I’m making an open appeal to Harkless’s victims: Help us paint the picture. Help us understand Harkless’s motivations. What should have been the red flags in your mind? What would you tell other potential victims to watch out for?
Share your comments here.
Or, what I like to call “the PIT.”
The PIT formula pretty much explains nearly every Ponzi scheme that hits the headlines. The recent case of Richard Monroe Harkless, a 65-year-old man from Riverside, Ca., who caused more than $39 million in losses among hundreds of investors, is no different. Let’s break it down.
Promise: Backed by the claim that he had guaranteed, government-backed contracts, Harkless promised investors returns of up to 14 percent every two to three months. Reality check: No one — absolutely no one — makes that kind of money. So, how could so many people believe that kind of promise? That brings us to: Illusion.
Illusion: At this point, the criminal creates the illusion that investors will, in fact, get what they were promised. In Harkless’s case, he created promotional literature. (Again, amazing how people can fall for something that may have been printed at a local Kinko’s.)
Trust: Ask yourself. If you got returns of 14 to 16 percent every two to three months, would you walk away? Probably not. Neither did Harkless’s investors. In fact, as the money kept rolling in, many signed up friends and family, widening the web of trust.
An open letter to Harkless’s victims: Help us paint the picture!
Recently, Harkless was sentenced to 100 years in prison for causing, what United States District Judge Virginia A. Phillips called, “every kind of grief and loss imaginable.”
But the story isn’t over. Not for the victims. And not for future victims like them.
To help offset future stories like this, I’m making an open appeal to Harkless’s victims: Help us paint the picture. Help us understand Harkless’s motivations. What should have been the red flags in your mind? What would you tell other potential victims to watch out for?
Share your comments here.