The Ponzi Scheme
Charles Ponzi, father of the Ponzi scheme, is one of the most famous con men of his time. In the early 1920s, he set up a scheme in which investors paid him money with a promise of return of payment at a later date. To pay off these investors, he got more investors to subscribe to his scheme. The number of his investors kept growing until he had enough to take away large sums of money and live luxuriously. As he was making no profit, he was obviously running a debt the whole time and it grew frighteningly fast. He, however, was able to spend all the money his investors had given him at any time he wished. Eventually, when the scheme came crashing down, he had stolen a worth of $225 million modern day dollars and all his investors were paid back only 30% of what they had invested due to the deficits he had created. While he received jail time and was fined, he kept the scheme running for an impressive year before its demise and gathered a large amount of money from victims that failed to educate themselves on he man's past criminal history (forgery in Canada, for example). So ultimately, while what he did was illegal, it was due to his own cunning and others ignorance that the plot was even able to occur.
Ponzi's rhetorical strategies were strong despite their paucity. One of the most prominent was his evidence of return. With early investments, he showed legitimate return to his investors, giving them back more money than they had started with. This show of success only caused more people to invest, and those people who he had paid back to reinvest all money he had given them. Ultimately, his strategy helped him accomplish his goal of swindling people out of their money even more. Another of Ponzi's strategies entailed advertising in juxtaposition to interest rates. Typical interest rates were about 5% annually at the time and Ponzi's scheme promised 50% return in under 2 months. With a contrast as stark as this, Ponzi was able to outline his scheme as the way to go for any prospective investor. By comparing directly his superior option with a far inferior option, Ponzi was able to cheat more people out of their money at a more rapid rate. Lastly, Ponzi related to his audience. His primary targets were immigrants. As he was from Italy, he was able to relate to immigrants and capitalize on his bond with them, establishing early credibility to get them to trust him. This is similar to the modern Ponzi schemer Bernie Madoff, who created a scheme through wall Street to make him substantial amounts of money, relating to many Jewish investors as he was also Jewish. As the video to the right points out, you are more likely to trust somebody who sits next to you at church than a random stranger. Ponzi schemes are mathematically not viable and grow at an outstanding rate, for further reading on various ways to escape them there is an article here. |
The video below shows Bernie Madoff, a modern Ponzi, and how his scheme was successful. (19.52)
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SElling Monuments
Victor Lustig of Hungary, is known for selling the Eiffel Tower twice. In 1925 maintenance of the structure was getting overly expensive, this was published broadly by the media. As, historically, the Eiffel tower was intended to be temporary and in 1925 it wouldn't be out of place for it to be torn down, Lustig seized the opportunity, forged a couple documents for the deconstruction of the tower, and gathered six metal dealers to discuss a deal to sell the metal of the structure. Posing as a government official, he found the most gullible of the six and capitalized on his insecurities, saying first that the public shouldn't know about this as there would be outcry at the removal of the monument. After his victim became suspicious, he admitted to being a corrupt government official that required a bribe, and that was why he wanted to keep it quiet. Lustig, then, got both a bribe and money for the sale of the Eiffel tower for its deconstruction, making off without any trouble as his victim was too embarrassed to contact authorities. The second time he tried the same thing, however his victim told the police. Nevertheless he managed to escape.
Lustig's strategy was primarily knowing the times and people in Paris. First, the Paris economy was booming and the Eiffel Tower temporary, such that it was believable that, with high costs to keep it up, it would be torn down. This increases his credibility. Next, gathered six people made the ordeal seem more legitimate and he was able to select the best target. Furthermore, he was able to take advantage of his audience by knowing them well. This particular investor wasn't in the high circle of scrap workers and thought he could attain that through Lustig's opportunity, giving him a weakness to exploit. Finally, by conceding that he was a corrupt government official, Lustig made his story more plausible and again increased credibility. Through the rhetorical strategies of relating to and targeting a specific audience, capitalizing on general opportunity within his environment, and conceding points, Lustig was able to successfully swindle money for a ridiculous proposition. |
"And if you believe that, I have a bridge to sell you." George Parker would say to his numerous weekly victims as he tried selling numerous landmarks in New York City. Most commonly the Brooklyn Bridge but sometimes the Statue of Liberty or Grant's Tomb, Parker would pose as a stressed operator, stressed maintainer, or grandson of Grant for the three respectively and sell these monuments to incoming immigrants. He sold them for as much as $50,000 and multiple times a week earning him a steady income. After he sold a monument, his victims may set up tolls on the bridge only to be told by the police that it wasn't allowed much to their dismay.
Once again, Parker really knows his audience. He targets immigrants, and, by bribing captains of boats to Ellis Island, finding the most rich and gullible immigrants, he can target them more directly. He takes their naivety and greed and uses both to convince them an unrealistic ideal is possible. Both of these strategies aid his purpose by capitalizing on his victim's weakness and increasing his credibility through their naivety. While he made substantial profit from this business, Parker was reported thrice and the last time was sent to a prison in Sing Sing, where he died. |
Street Fraud
Matt the Knife was a con man and pickpocket early in his life, tricking people out of money with lies in a similar way to a scam, yet different in the sense that it was all sleight of hand and distractions, less of the capitalization on others greed that is present in other scams. After being caught for his acts of fraud, he agreed to teach against conning and the harms of it. He know does presentation on lying, magic tricks, and fraud, all without malicious intent. He also holds many world records in things such as escapes, card manipulation, and sword swallowing.
The act of con artists in the street is less about credibility and more about distraction. By using visual strategy to draw the viewer's attention elsewhere, the con artist is able to take the victim's money or personal belongings. This visual strategy can be in the form of a magic trick or having a partner drop something which the victim helps pick up. Either way it is a strategy that helps the scammer to accomplish the task of taking money. Below is a video demonstrating such a distraction. In the video, the rhetoric is apparent in that Jack Wilder, the man performing the trick, first offers a monetary incentive for somebody to boldly come forward, meaning that when they do they will be focused on the money. Additionally, he holds everyone else's focus with the trick he accomplishes. Because of this he is able to swindle a man of his entire wallet with relative ease. |
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Matt the Knife, in the presentation above, discusses lying as a tactic in fraud. He illustrates that lies are only bad in fraud because they are used with malicious intent, arguing that lying isn't inherently negative and can even be beautiful. The point of this video is that, while lying is a fundamental element of rhetoric in fraud, it has other properties that aren't negative. The set up and execution of a well planned lie makes people question the world around them, and that is a very positive thing. This rhetorical strategy so often employed by fraudsters, he shows, is also used by nearly everybody and is ubiquitous in modern society.
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The South Sea Company
The South Sea Company was created in 1711, the South Sea referring to South America. Robert Harley, the director had to find a way to pay off debt from British war, so he feigned setting up a trading company. The Company with the British government persuaded shareholders to take ten million pounds in government date for shares in the company, the government would pay interest on this money in the long run. Eventually, the trading rights of the company were established clearly and very limited, disappointing Harley, especially considering they now had taken on 2 more million pounds of government debt. By 1719, the Company held 11.7 million pounds of the debt. Because it's trading rights were limited, the company decided it would spark investor interests to get more money with talk of gold in South America, and in 1720, the shares of the Company's stock grew from 128 pounds in January to 550 in May. These shares were offered to government officials and were in high demand. Thus other companies attempted to do the same giving reasons for a charter of things such as:
These companies warranted the "Bubble Act" of 1720 that required these new companies to be incorporated. Because there were even fewer of these companies, the South Sea Company Stock skyrocketed to 890 pounds and later to 1000. However, there was little profit made in the business, and, when people started bailing out the whole plan imploded, causing everyone invested to lose money. The valuation of the company however was over 9 million pounds in the time periods currency (well over the country's GDP without ever really importing or exporting anything) or over $225 trillion dollars today. The rhetoric here is primarily in the advertisement of the Company, which initiated heavy investment simply on the vague promise of gold. This could be considered a rudimentary form of "salting the gold mine" where small bits of gold are put in a mine to make it seem like it is profitable, however here it was only tell of gold. By having people such as the man to the right run around yelling of the gold discoveries, the propaganda spread like wildfire, resulting in the desired rise in investment. Overall this scheme, while somewhat unintentional with regard to malicious implication, had serious rhetoric behind it that allowed it to pull of an unprecedented feat in what may well be the biggest scam in history. |