Scammed again

Wise Words: scam

Bernard Madoff has pleaded guilty to one of the biggest scams in the history of Wall Street. He scammed investors out of billions of dollars — $65 billion to be exact. The scammer could face up to 150 years behind bars. He deserves every one of them.

The former Nasdaq chairman ran a Ponzi scheme. This is where money from new investors is used to pay off old investors. The original Ponzi scheme, named after the Italian immigrant scammer Charles Ponzi, ran for only eight months. Madoff’s scam ran for decades and was only revealed when, because of the credit crunch, no new investors could be found.

Millionaires and billionaires lost millions and billions, but pensioners lost their small nest eggs, too. Now, they have to go back to work at a time when jobs are hard to find. Charities have lost millions, too. Who will have the confidence to give money to charities in these hard times (apart from Ian McMaster!)?

Nobody really knows where all the money has gone, but Madoff must have made off with most of it.

How could he dupe people for so long — and for so much? High-profile, intelligent people fell for the scam. What were they thinking as they invested their life savings with him? Madoff sold them a secret society that he claimed was only a small exclusive group, which is why the benefits they would reap would be huge. In the end, the group consisted not of hundreds, but of thousands. And they weren’t rewarded; they were bilked.

Like all scammers, Madoff knew about our weak human nature: we suffer from greed, ignorance, blind trust, insecurity and fear. Most of all, however, he knew that people like to abdicate responsibility. It’s so easy to let other people make decisions for us — especially if they promise us what we seek in return.

Madoff took responsibility for the Ponzi scheme, but there’s absolutely no way he could have managed the scam on his own, which means that there are still other scammers out there. How can you avoid being taken in by them?

• Don’t be greedy — there’s no such thing as a fast buck or a free lunch.
  
• Don’t be ignorant — do your own research. Nothing is ever guaranteed.
  
• Don’t trust confident sales talk — be suspicious. Get the facts.
  
• Don’t be insecure — demand the facts so you can be confident.
  
• Don’t let your fear decide your future — don’t make rash decisions.
  
• Take responsibility — use your fear to make wiser decisions. Get second, third and fourth opinions before you decide anything.

During periods of bust, experts expect scams to increase. Here are two that are increasingly popular — and surprisingly successful.

The 419 scam

Often from Nigeria, these e-mail scams try to entice people into a bogus plot to acquire and split a large sum of money. First, they have to transfer money before they can get a share of the money. Of course, there is no money.

Lottery win

If you receive an e-mail stating "Your e-mail has been picked as a winner of a lump sum pay out of Nine Hundred Thousand euros", trash it. You will get nothing!

Remember: if somethng sounds too good to be true it probably is. A scam, that is.