A recent article at Asset Recovery Watch.com discussed psychological profiling of scammers who run Ponzi Schemes, as well as, a discussion about the victims. For anyone not aware, after the recent deluge of press about Bernie Madoff and some other recent high-profile schemes, a Ponzi Scheme is one in which the scammer uses recent invested funds to to keep earlier investors happy. The scheme requires aggressive continued scamming to keep new money coming in, as the scammer has spent or hidden much of the prior money, to keep paying the ususally high dividends/returns/rewards promised to everyone. Sometimes, in the case of the Florida scheme, the investment is in large scale real estate, which is never actually purchased or acquired.
The article talks about Greed but also talked about the "thrill' of the more average person or investor finally getting to share in the high rewards of the "other guy", the rich, or connected or those "wired-into" the deal. The etymology behind the term "Con Man" is that the confidence swindler gives you, the victim, his or her confidence. They "trust" you or share with you because they "believe in" you.
The Financial Industry Regulatory Authority, an industry watchdog group, profiled a typical victim of investment fraud. Their profile included people who are: highly educated, have higher incomes than non-victims, score higher on financial literacy tests, and are self-reliant preferring to act on their own knowledge rather than consult others.
In short, if it sounds too good or lucrative or unusually profitable to be true it probably is. If you are someone, on sober self-reflection, who fits the FIRA profile, you should also be smart enough to always go against impulse and consult professionals before ever committing significant funds with anyone.
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