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The five hundred five hundred everybody. This is check here on the ranch house, the fork studios and welcome to Saturday selects April my two thousand nine we're goin away back into the archive for this one, how upon such schemes or work and honestly epic, this one, because I believe I believe this is the very first instance of me doing my bad italian exit. It started with this episode, if I'm not mistaken, and it has since become such a part of the show- and I thought I might as well repose this select episode from where it all began and not only that, but it's really interesting. You know it's a really interesting and falling into it right now. A party schemes very, very interesting topic and we, we we get into it here. We let you know how to be aware of them and in the history behind of it there was a real ponte. You know that

learn all about it right now. Everyone I fancy schemes, work. Welcome to study should know how stuff works done, I welcome the podcast, Josh Clerk Chuck, say hi. I welcome But this is a step you should know. Indeed, chucks got his

little juggled vodka. I got my Prescott. We were ready to go right jack. I don't like Chuck checked, you know. How are we had the weblogs now there's like stuff, you should know web log, a log, yes sure yeah yeah, whatever I do know how we have that, because I write on every day. I know I'm starting a conversation chuck lay off. Oh yes, I remember that post I put up yesterday that you said, like you, read three times and still could make heads or tails of a yeah hadn't get it because there is. There is a part of it kind of the crux of the whole thing. I don't know, if that's the case, but anyway there's an aspect of it, and it was about these these two artists. And I'm the one of em just goes by the name, erika, ok, right and his partner in an old think, just artistic partner if they think that their life partners

maybe gotcha. Her name is meddling gins right and they have been quite successful at creating this architecture that intended to achieve. Mortality right. How so well the way these to have done. It is by through surprising, disturbing architectural choices right. Ok, basically, their theory is that you create or if you live in an uncomfortable dwelling, discomfort comfort, LISA Laziness and Sedentary Agnes, and then that's ultimately, what killed you wholly unproved ok, but they design their architecture based on that theory, so they keep you uncomfortable right and it's unfair. Here I think I know this. I think we actually have an article on this like the floor.

Reserve, undulating undulating, yours and you have heard that they they also like a kind of moon, Scape floors right angle. Like ceilings ages, it it doesn't selling very pleasant place to live every interesting. This one guy in these things go further there just to build them. They cosmic, the dollars, but they had built. Several most of em are Lawson in Tokyo and this one I who lives in one with his family, said that he's lost like twenty pounds in doesnt have hay fever. Any longer and he moved in their yeah, but they're they're. There Hola firm, is basically in jeopardy because they were here. We invested with one Bernard made off, who you may make

heard. I yes disguise. Reach extends everywhere, were talking Kevin Bacon right in this, a six degrees joke in there somewhere. I imagine cures such wicks and Kevin Bacon in their right, Georgia, Gabor, Spielberg Spielberg, and that's just like the tip of the iceberg. My I mean thousands and thousands of people were invested with this guy and it turned out. He was a policy steamer. That's right! It's upon scheme yet Chuck likes to say There is a tribute to the italian immigrant, Mr Charles Ponzi, who was run around in the twenties and nationalities yeah. You want to talk a little bit about a Mr Ponds, yet another until I read the articles- pre interesting in your panties all over the new, so it's kind of cool they get some background. Yeah, oh and also we should probably say, thanks to all the people who wrote in a requested that we do this podcast bright. This one for you right, Bernie man of made off gives me himself road, and yet he did. He say: hey, Can you tell everybody what I did?

so, uniting Twenties Charles Policy, where he did what At the time there was, if you want to send mail overseas, you would include What was called an international replied? You find well, if you want to reply right, that's it's basically sort of like when you get something from a magazine in the postage is prepared to reassure the card. You know right, it's it's prepaid so that you get that back to say: hey these people got that exact right. So this is what you did back. Then he had an idea He said hey if I go over by these in a different country where their cheaper, I can come back and sell em in the United States right, and he could do this, because things were internationally recognised. There is same in any country exactly, but apparently they went for different prices in different countries. Right does not a bad business. Malta right outside so in things went pretty well at first, he

investors and made some pretty good money, but the return that he promised, which what was it again? It was ridiculous promise. It was so. I think fifty percent return in forty five to ninety days right so yeah, that should have been a red flag, Mozilla and we'll talk about that later. But yet didn't go as well as he thought, but he kept getting investors any just gonna kept this quiet what he would do as he would pay back. The initial investors based on the money that the current investors for giving them and just kind of kept going in a sick as sickly away, until he had a lot of you started Nino taking money from self here and in it up having no millions of bucks off this in the nineteen twenties before it finally crumbled as a big scam The reason he was found out was because somebody apparently calculated that there would have had to have been about a hundred and sixty million of these things, in for him to be making the money was making right, and the problem is that there is only too.

Seven thousand exactly that's. That's kind of what found him out What I got from this, what a guy from reading about ponzi schemes as that Charles Ponzi, appear to be of huckster from the outset. Like you, re, actually not a legitimate business that he was trying to run a fellow is sure. I think it was an act of desperation right and what we should probably talk about exactly how ponzi scheme work, great writer, pretty straightforward and simple better. I can imagine that, as they d get bigger and bigger, you start to eat a lot of roll Lades right about that. That was the original panty scheme and I'm sure he was nervous. That was gotten if he was a good looking, upon seascape. Very nice just thinks so. Do you, give some detailed explanation on how ponzi schemes work. Yeah, it's actually pretty simple. What you do is you. You come up with a investment EL sort of do and you get people to invest in your in whatever your

saying: you're gonna, invest in this case in the original policy scheme. It was these reply coupons, but nowadays is usually like a stock thing. Sit. New year's resolutions are very, very difficult to keep getting. Exercise save more money. What have on this? We have a resolution that you can really work with stop wasting time going to the post office that right you stamps dot com instead because they bring all the services of the. U S: postal service, right to your computer, with your small business sinning invoice.

Is or packages or an online seller shipping out products stamps that can handle it all with ease. Yet, and get this with Sampson COM, you get five cents off every first class stamp in up to forty percent of priority mail. This right? U S postage twenty four, seven for any letter, any package, any class anywhere! You want to send it! There's no risk and using our promo code, ass white, ass, gay you're gonna get this offer afore weak trial, plus free postage and a digital scale, and there are no long term commitments or contracts just go to stamp that come click on the microphone off the top of the home page and type in s. Why, as K that stance, I come promo code S, why, as K, Stanza COM we'll go to the post office again. So Get these folks to invest and you take their money and essentially use that first,

of people to attract other people to invest in one start getting other investors. You can pay back those initial folks and they can go on record and say: oh yeah, you know I made a great return, that's exactly right and then a little more investors riot and more wrongs, and you just kind of it's sort of like robbing Peter to pay Paul sure the entire time. What about your pocketing, like Ponzi, did for himself at a certain point. You can start skim off the top right in it, but it's not like it. Take the money and Rome proposition is to take the money: stick around and pay people off as much as you can see the problem. As is too like people don't divest very easily when they they get a better An unbelievable return on something rightly want to keep investing yours. If you don't know, you can invest anymore, that people are gonna starting at suspicious, so rang got your first wrong you get your second wrong in and so on, and so on and so on. But this Spain, it you have to keep adding more more rungs, but the more rungs you add more difficult. It is to pay everybody back.

Right, although inevitable that collapses, but as some people will know, Investing in a party scheme, some of those first wrong people get in From what I understand, people can actually make money, policies, king of georgian and early enough in your smart enough to get out while Higgins get right as those of the people are gonna get paid first, so they can vouch and say this is a really great deal right, exactly tell Yasser yeah so the whole that that's pretty much a pilot scheme and if it sounds a lot like a pyramid scheme, do you would be right, it's virtually the same structured than one big differences, is it an upon these game. You're not asked to do anything right, just investor they just want your money in appearance scheme generally, you have to do something like you are buying. In to sell something anyway, we'll know actually on anyway site. They have. I gonna F, a cue section. It's like is anyway, a pyramid scheme right and there, like we're up mid model schemes. The wrong word to use actually the p

amid model has worked for legitimate businesses. Anyway, Mary K K is on a pair chef, pampered chef. So, yes, I mean it can work in doesn't necessarily have to be illegal. The that that's the other, distinction between ponzi schemes, Pyramids right models is that pension schemes are always fraud completely false, because its vestment, but the monies ever invested. So we'll simple when I read this out of a car is it is the beauty is in its simplicity, doesn't a bunch of money and I will keep it more people to give me money I'll, give you a little bit and it's amazing how that we're? Can you imagine being such an edgy savvy investor that you actually knowingly invests in ponzi schemes yeah? Who does I bet there's some names on the year on the made off last year on that number, but now he did everything alone or get to him in a minute, allegedly no more or he confessed, buddy well words, certain

these are still alleged. At this point, I owe the skeletal your status, the away dude it, but I appreciate the o because they include me ok, so pond, It wasn't the guy who came up with a scheme. He Did it so well that it they named after him but the earliest, when we know about, goes back to eighteen, eighty early eighteen, eighties in Boston with a woman named Sarah. How something I know about this so she actually actively and purposefully built up Lindsey Scheme right, although you know what, with it being forty years before Charles Ponzi showed up pleading called that yourself. What's her name, how, sir, how to housekeeping me ass if she were, if she did have an of foresight to know that it would eventually be called upon to scheme how'd it sound in her head when she said this the kind, a scheme that I'm carrying out its upon Siskiyou, that's right anyway, MS, how basically put together a m, a group of thanks

of women investors and invested in women's women's liberty. Bonds, I think, is what they recall that supposedly with the investment was for, but no it wasn't. She just basically carried. Upon this game right and she managed to rake in about half a million bucks before she was caught. And then another guy? Shortly after about the turn of the century? I his name was William Franklin Miller and he also built in Esters for about another half a million, and this is you know substantial enough to be remembered a hundred years unless later, but Ponzi was the first one right right, positive, the first big one I should sure, and then you don't really here about anybody else in the world upon these games a me, I'm sure you can buy nobody p, we are doing right now, right, he'll loop Romans that we're going. I was

they go to the Balkans. First boys do Mr Pearlman, ok, yeah, there's one of my favorites decision. Associations are kind of funny Loophole, who I think you have to say his name like Lou, Perlman, attire the impression is weren't. Gonna looks like that kind of criteria. He was he kind of funded the boy band praise in the nineties- and I remembered the back street boys because of the tattoo you have on your neck. And in sync was the other one. I dont know if you have a tattoo and do I was covering all my basis, so he funded these bans and it turned out in two thousand six it. He was running a big party scheme. He had been for like twenty year right What you know in sinking back street boys we're gonna funded on this policy schemes. I dont think funded kind of it all did they were fully funds only funded right here in this? Is God created the battery boys and insight and funded em with illegal money,

So those yeah who's gonna o patent policy with their career. Yes, they do and yet well their careers past tense timber likes them off himself was human who J T? I don't know who that is shut up right back to Albania? I, yes, Albania. Basically, a whole bunch of people were working. This big this game, which, from what I understand also we can extend the life of a ponzi scheme. Lou Perlman is an unusual animal in that. Could carry it out single handedly for twenty years right, but in Albania for a while a group of Ponzi schemers had one set up that built the these esters out of two billion dollar here before collapsed witches. Albania that is thirty percent of their gross domestic product. That's huge death like how to cripple a country but yeah yeah yeah

So I think a baby is probably second world, so I think it a hit like that is just Jain Normous, and that was a big problem when it happened there was, because when people found out they sort of riding in the streets and fires broke out, people die yeah yeah. So that's the Albania, the old Albania Ponzi scheme, and we should note that Lou Perlman he went to jail or risk descendants of twenty five years for conning three. Hundred million dollars and apparently every million he paid back. They cut a month opposites, so it would seem truly fair. I think so, but Men, three hundred million dollars sounds like a lot. It ain't. It was and then two thousand eight came along the big daddy dude. This guy Verne Ard made all right. One of the founders of NASDAQ yeah, which is one reason why it worked so well because he was beyond legit, he was beyond legit, although he hit him

One of the other reasons he was so successful was that he was smart. First, more, like a sir, how he used affinity, fraud in affinity. Fraud is where your bilking you're you're, using the inclusiveness of a group to against themselves right right, so he used his membership in a goober, wealthy, very exclusive jewish country club down in Florida to prey on investors at first reading. And you know the affinity. Fraud happens. A lot lately in usually happens with religious groups. So many comes ok, I'm the Lutheran too, and I get this green investments since sees the Lutheran Euro is abstaining. You trust him and then that's that right, but made up very much used affinity, fraud at least at first and then news of his amazing returns got out by

as I was saying the reason you so successful is he he didn't pull Ponzi and say. Ok, you, fifty percent return in forty five days. You know he offered reasonable ethical, percent was the average returns below the long haul right that was accused very believable world to an extent. Have you ever looked at our prospectus, the tea row, priceless prospectus respect this year. Have you ever known like if you look at it like one year, three years, five years ten year on us and it'll, be up at one year, down three years down five years up, he was offering like a straight even keel. Eleven percent return right. You couldn't lose right, so that actually should have been a red flag, but it wasn't rent and two thousand one barons, the financial rag they published, a an article on him specific we say you re in his plan was saying: made off can't be offering these returns. Mathematically speaking, this

impossible. I know unless it s but chief among the people who Listening was the SSC yeah and they ve been under a lot of fire lately because they did not listen. They did not investigate even when it was kind of handed to them like he, several times I ITALY's ever is going on here. There are like two or three formal complaints write to them and they never followed up where one reason why- and this is even another reason why you successful- he was also running a legit business. Isn't that so he could sort of for you know when he needed to pay people back and things are getting tight. He could pull little money out of his legit business right and ended in apparently did so. Thirdly, if somebody wanted to yet withdrawal to near they, they gotta check like that. No questions asked sanguine. Kevin Bacon was like we're heading to bar doesn t need a million dollars cause. I'm gonna buy a hut on the beach right, I'm trying to hide my wife from her shame for being in the closer yeah, Sir,

We tell you about people who love talking and always wanted in a nutshell, PETE played since he was three and big his mom to let him stay on the ice. Why some nights he even slept in his happy skates PETE practiced in practice to one day when he was forty. Seven feet realized. He just wasn't that good, so he threw his gates in the trash But then he heard how Geico proud partner of any Joe could save him money on car insurance, so he switched and saved a bunch. So it all worked out, so oh yeah made off was very, very successful to the tune of twenty to fifty billion dollars. Yet he made off with, I know, he's got the perfect names were and should have been taken

What you lessening norm, not investing a bit every headline is already use that so this probably stale by now, thanks for their church you're. So what Wikipedia How do you stay out of upon these games unless you're very savvy investor, whose totally unconscionable well there? few things you can look for and it it also should be noted that policy scheme, is pretty much a one way street to collapse there are really no way to pull it off in the long run sustainable. Unless I think a lot of people might start these and think well, I can get out at a certain point parry. Back and make a lot of money but yeah? It's it's a good working model in the well apparently the point to upon these gamers to keep going until they die yet, which is considered a big success. Yet Is you live like a billionaire right and then at the end you know you dire he off yourself We need round- or speaking of that, did you know that after he was found out, made off with spending a hundred and sixty grand a month on personal security.

House, yeah, I've already. Well, you know how many in manhandled do you know how many bodyguards that buys you that's a delta force money So you something's, you can look for The obvious, of course, is if it sounds too good to be true. It is that, if the oldest adage in the book- and it's true also the so someone's make any promises on big returns. Then, despite turn around walk away, but don't let anyone pressure you into doing wolden pressure. That's another point to is, I mean it's usually gonna be a high pressure pitch like You have a very limited time window may be for as long as the person standing there in your made to feel like a jack ass. If you do take them up on it, but yeah. The pressures definitely want one of this actors, even one like you said that are like made. Scam where he would not promise huge returns that

I make it a little more believable, but everything like you said, fluctuates Joe. If it's a consistent, even if it's a consistent like five percent growth for years threat, that should be a red flag right there and also you You dumb ask questions and in demand answers as well, because I mean, if you just a friend who has a friend that has a great investment new cut him a check in it turns out to be upon this Gamewell ts. For you know this. The thing to do. You should know what your money is being invested in. You should know whose investing it you should in an even if its legitimate, you should be asking these questions of its through any of the major brokered right now, how many fees there are just just that's a good habit, no matter what their and the other thing is, I'm even if you're involved in a policy scheme, even if you get sucked in you should never. It should never break you and leave you bank robbery. Excellent point. Chukka causes is probably the most important point, one

May I say, diversification is the key to a good portfolio, and this is definitely true here you should know. Invest all your money. In one thing you do setting yourself up right for bankruptcy, upon this scheme or not yet accepted you all real estate in you're, just totally investing a real estate in two thousand seven year in big trouble, I mean even Donald Trump hit, the lowest of those. At one point, we forget think he's lost a lot of his old age that are used to have a bad decision. Yeah, like the tv show sure now need to see that gonna nail and if you are, if you do find yourself, pilot scheme and you're, not the time to take the law into your own hands, would like attire iron or anything like that. You could always contact them. As you see, I don't know that they'll do anything and they probably won't, but it's worth a shot any right right own? We should just as a sidebar here. I know that made off did confess, but they are theirs. As he said still coming under fire because he's claiming that he acted alone and didn't have any help with this, which is

really really hard to believe disorders, paperwork alone, first scheme, this size would be huge and some people think there that you probably had his family involved and then did everything he could to cover for them and take the hits was yet to come while so, even if they were involved, their salary came directly from the building of other people. Sure, even if they somehow words is totally unaware of it. It makes it kind of. I don't know it puts it, puts their own wealth in question right Sonya. So that's a policy schemes that was very good chuckle. Check my mom say that we are going to talk about her spoken word. Album yes, We shall then maybe we'll talk about blogs and then listener may stick around. Fires were married, so we do have spoken word album first, one and it is about the economy in economics. Everyone knows that we are in the second great depression DA. We just kind of decided to make a

spoken word album about that. That's it that's the two, an off so a slightly off kilter description, it's more like a guy right might possibly guided the economy. That's what it's but it's very big right like there's a lot of stuff in yes, is called. Stuff, you should know superstar guiding economy got expert interviews, Josh Night get other studio, we going around The worrying for chicken farm not spoil it. And Jerry are awesome producer. She did excellence design and it's got more bells and whistles in it's definitely a cut above the silliness. We do here each week and yeah and you can find it by typing a super stuffed in the search bar at Itune. It's three hundred and ninety nine frankly checking. I think it's worth it. I think so. So if you want to get it knock yourself out, get it a couple times if you like support it, yeah, because it

blows up your computer after forty eight hours, unless you keep downloading it fresh each time. Right now, I'm dreaming for it over and over again so there is our plug knows, but the boy yes, we ve on the block. Now I hope you guys aren't sick of it yet but Josh and I block a couple of times a day he post once I post once and it's called stuff you should know you, can find it on the right hand, side of our homepage house of works, dot, com, you and we just cherry pick interesting news items and catholic. What we do here, except It may not be enough to flesh out of will show you a couple times. We love we posted on listener suggestions. Like my colleague, I see this absolutely so yeah keep teeth the ideas coming. We love em. It keeps us from having to do any real research history and with that- leads us to listener. Malta, ok, George. This is an instalment of stuff we should now, if we I've known now. It's not because sometimes is additional things

They must know footing this one is from Sarah Answer wrote in about the word theory verses hypotheses, sir. As a teacher, and we say all the time someone's theory someone's theory and cheese, We ve been misusing it. She says in the thinking cap podcast, you repeated you repeatedly reference theories. About seven tourism and letter hemisphere, damage and scientifically these are not theories their hypotheses. So her basic point is the a theory is not just an educated guess. It's something that a lot of detail and research has gone into to get to the point where you can call it a theory like the theory of evolution, which is often dismissed as though it's just a theory, but a theory is actually got a so I say or wanted to set the record straight. So we did that another little minor correction here, Josh said at one:

why we were the only country that uses the imperial system at the sound of the way. With the dead bodies. On every side we did not a fish the: U S, Burma, Liberia and my enlarge my more in Burma the same place ever since the who, it's no Myanmar! rich from Omaha Joshua from you clear, Wisconsin Stephanie, nor Delaware and GM, they all road hidden, Does that and I have one more and I like this, one Stephanie wrote in and told us that on our aphrodisiacs by gas return, not phallic symbol and fallacies. You talk about an oyster, apparently there is a word for something that resembles the theme. Yeah. I was interested to hear this cuz. We kept females female and I wish avail she had written in before then, and we knew that values only represent male January, but I did not realise there was one for female Labour Minister Yannick

Why? Oh and I see- and she said yeah our Jani is sanskrit for the word womb, Volvo in place of origin, and she said she just want to tell us. This goes for one the first time, and I shall give you some Yannick seventy seven year thanks Stephanie get em processing it right now. So Yannick, no remember the famous to inspire. I know his name, any Algeria reference to female didn t knows that, surely better. So, if you want to, now that there are other words chuck and I unfamiliar with. Basically, let me know that I shouldn't call my crackpot theories theories but hypotheses. Instead, just say hi you can send an email to stuff podcast. How stuff words

Furthermore, on this and thousands of other topics how stuff works, dot, com, no matter what happens, I'm always a disruptive. I'm rose really, host of the women. A new weekly pod gas from I hurt radio or I'll interview. The kind of women where I dont know I want to be them or be friends with them, but then, when I realized, I had a voice that I could speak about things that I really care about, whether it's nuclear weapons, whether it's part of depression, I too, the women now on her radio up an apple podcast or wherever you get your podcast.