Page 18 THE VILLADOM TIMES IV • May 13, 2009 short-term magic of profits from postal reply coupons and built the biggest pyramid since the days of the pharaohs. Ponzi’s circa 1920 plan was to use the profit potential of postal reply coupons to attract investors who were lured with the impossible attraction of a 50 percent profit in 45 days or a 100 percent profit in 90 days. The first stages of his investment scheme worked because he used the money from subsequent investors to pay initial investors who wanted their profits back fast. Few did. People took out mortgages on their homes or plunked their life savings into the Ponzi scheme until Ponzi himself was taking in $250,000 a day. However, he was $2 million in debt because he was spending money faster than he seemed to be earning it. A newspaper won the Pulitzer Prize explaining how the scheme worked, and Ponzi went to prison. His investors ultimately got back 30 cents on the dollar when the company went bankrupt. People with inferiority complexes who buy into special seminars for $1,500 and up with broke millionaires after being encouraged to wake up the financial genius within themselves and have the courage to dare, have probably never heard of Ponzi, or before him of John Law. An emigrant Scotsman, Law almost brought down the French monarchy of the 1700s with a scheme called the Mississippi Bubble. Bernard Madoff certainly heard of Ponzi. He appears to have been a role model. For the people who don’t have any money to invest, there are always the computer offers to “work in your pajamas and make thousands a week.” (I’m not going to expand on that one except to say that there are people who actually do this when they aren’t modeling or auditioning for screen roles, but that’s not what the hapless people who answer the ads generally have in mind. The idea is that if you send the advertiser some money, they will send you a course on how anyone with basic typing skills and a computer can make scads of money. One legitimate firm that helps people find real jobs estimated the ratio of fraudulent offers to genuine work through these ads at 56 to 1. The Better Business Bureau and the Attorney General’s Office have plenty of complaints on file. The ads use images of impossible profits, huge houses, tropical resort vacations, and work that is never defined or explained to catch a target audience of 18-to-49-year-old non-college graduates who have no specialized skills, and possibly who have never studied psychology or economics. The problem has become so outrageous in this economic crunch that the article warning about scams was appended with come-ons to some of the favorite rip-off schemes: make a ton of money at home finding people who want to save money by switching gas and electric service – without changing the pipes or the wires? -- and the economic aspects of this one were sheer John Law and Charles Ponzi – everybody who gets new customers gets a kickback and everybody those new customers get entitle the first workat-homer to a kickback. A writer who types in all capital letters, tells readers that, yes, some of these work-at-home offers are frauds, but this one really works. Another says that for a minimal investment, the price of a flat-screen TV, you could be making thousands a week from home. Here’s a better idea. Buy the flat-screen TV and use it to watch a movie called “House of Games.” Next time a Gypsy shows up to read your meter or you win a chance at a free shopping card by becoming the 999,999th person to visit a website – I’m still getting electronic junk mail from that one – you will be glad you saw this movie. The other night I was at a council meeting and a woman who has a reputation for helping senior citizens told a horror story. Some “contractor” is roaming the region telling senior citizens that the local authorities have ordered that everybody get their chimney checked or face a fine for violation. Once the chimney-checker gets to the senior citizen’s house, of course, he finds something wrong that can be fixed for a few hundred or a few thousand dollars right away. Once the people come up with the money, the chimney-checker will do some cosmetic work, or may just take the money and run. The council members had not heard of this particular operator, but they denied that the regulation the chimneychecker described ever existed. The whole thing is a scam. Springtime is the prime season for home repair scams. Typically, a clean-cut man will show up at an older person’s door – widows are a favorite target – and tell the potential victim that he noticed that the driveway or the roof was in urgent need of repair and because he just finished a job down the street he could do the job with leftover materials at a bargain price. If cash changes hands in advance, this is usually the last time the homeowner will see the “contractor.” If the shrewd homeowner won’t pay until the job is done, she sometimes never sees the “contractor” again. Sometimes, homeowners get a coat of cheap black paint on the driveway. The mindset of these crooks is interesting: They believe rich people should be separated from their money by whatever means necessary. Some scams involve greed rather than gullibility. The classic is the Ponzi scheme, named for Charles Ponzi, an Italian immigrant who, while described by one investigative reporter as “a financial idiot,” discovered what is called arbitrage. An investor, let us say, using dollars, buys French or Swiss francs in bulk and then converts them to Deutschmarks at a profit or vice versa. Some people do this accidentally when they convert U.S. Travelers Checks back to dollars instead of spending them overseas – though you can also lose money that way. A former student, he said, of the University of Rome, Ponzi arrived in the United States in 1903 with $2.50 in his pocket after some bad luck gambling on the boat. “I landed in this country with $2.50 in cash and a million dollars in hopes, and those hopes never left me,” he said. Quite. Ponzi got a job with Luigi Zarossi, whose bank in Montreal offered six percent interest – twice the going rate – and enjoyed a huge popularity among recent Italian immigrants. Unfortunately, the bank made a number of bad investments and Zarossi covered his losses by using the deposits from new customers to pay off the demands of old customers while he planned what recent computer ads call “an escape” of a vacation. He took it minus his family. Ponzi moved into Zarossi’s house. When he forged a check for $424, Ponzi ended up in prison. After a few more vacations at government expense, Ponzi discovered the Springtime scams: Learn to protect yourself School of Rocks Julie Gulino’s fourth graders at Dater School in Ramsey learn all about the science of rocks by creating games on the subject. Top: Emily Friedemann and Holden Scholl playing Rock Racers. Below left: Aidan Telfer and Tyler Lee try a game of Rock Find. Below right: Trevor Hansen creator of Rock Quarry.