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Financial Fraud: Neighborhood Watch

05/28/2009 05:12 am 05:12:01 | Updated May 25, 2011

Ponzi: Coming Soon to a Neighborhood Near You

Every day, it seems, there are new reports about financial fraud. See for yourself. Just Google "Ponzi" and hit the "news" button. This morning, the search engine returned 11,085 stories in .28 seconds.

Thank you, Google.

Most of the Ponzi schemes originate in the United States. It's embarrassing. Our currency may soon carry a revised motto.

One nation under fraud.

By comparison, try googling "Ponzi Paris" and see what happens: only 37 hits in .07 seconds. And most of those articles cover fallout from Bernie Madoff. There's one about his villa in Cap d'Antibes, southern France.

There's another about Simone Ponzi. I have no idea whether he's related to the infamous Charles Ponzi. Simone is a professional cyclist, who competes with the Lampre team. He played a strategic role in this year's Tour of Turkey. He's a Ponzi breakaway guy, not a Ponzi fraudster.

What can be done about all these scandals? For one -- take responsibility. Stay vigilant when it comes to personal finances. Review your monthly statements.

We can also learn from the past, no matter how sordid. That's why I created The World Atlas of Financial Scandals. It shows the whereabouts of financial fraud, past and present. I'll add to the map on a regular basis. Please send me links to breaking stories that are relevant.

Not just Ponzi schemes. Any graft will do.

No doubt the government will increase regulation and supervision. I would like to see them separate the "custody" function from "money management." I'll revisit this topic in future posts. But for now, you can read more in one of my original posts from March 2009, "Beating Bernie."

We know the following about financial frauds: Con artists always control the flow of financial information. They must, by necessity, report performance results. Otherwise it would be impossible to lure people into their webs of deception.

Con artists disguise their investment styles with enigmatic names, like Madoff's "split-strike" option strategy. They live lavish life styles and cycle through the charity circuits to build credibility. They'll fleece anybody. Just look at all the philanthropies hurt by Madoff.

The World Atlas of Financial Scandals
includes links that, regrettably, hit a little too close to home.

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