Charles Ponzi and his ilk

Charles Ponzi claimed to be buying discounted postal reply coupons in other countries and redeeming them here at face value, performing a kind of arbitrage. He promised his investors 50% in 45 days or 100% in 90 days. Postal reply coupons were supposed to allow the recipient of a letter the money to mail back a reply. A Boston reporter suggested that there was no way Ponzi could legitimately be making that kind of money. Ponzi sued him for defamation and won. Bernie Madoff and Arthur Nadel are only the latest in a long line of swindlers. We suspect that some of these people start out legitimately are just too embarrassed to admit they lost 40% (of whatever) of their investors money so they lie, claim great returns, and start a process that is never going to end well for them. Now, states are looking at special legislation to “tackle Ponzi schemes,” as if fraud is not illegal enough now, or that by legislating they will prevent people from stealing. Generally involving new teams of cops and prosecutors, these proposals from Connecticut to Florida include letting states pursue securities fraud and money laundering (typically federal crimes, but ones most states can prosecute anyhow). In any case, the Buzz says watch out you don’t outlaw social security (or, maybe that’s OK too).
--Paul Marotta