April 5, 2008 Ponzi Scam in Finland
The pyramid scheme named Wincapita made a few happy people and thousands of angry ones. According to some news, the happy ones are in Thailand. Angry ones are reporting to the Finnish National Bureau of Investigation, or silently cursing their losses.
Here’s a good wrap-up of the issue. The scheme started in 2005 with the prop of Forex trading; the high interests for investments (400%) would come from currency exchanges. The Wincapita website went offline in March, company vanished and damage assessment began. Details are scarce as usually, but in essence top 50 or so got huge gains, 10000 or so lost packs of money. Estimated 50 million euros were invested to the company.
Interestingly, the brochure of Wincapita clearly stated that “Invest only the amount of money you are capable of losing.”
Internet has made the spreading of Nigerian letters and building of Ponzi companies easy. Nowadays, one can easily hire a person who under different fake names hoax the Ponzi company in newsgroups and message boards etc.
Why do people fall in to these traps, time and again? I’d see that at least some of the persons who give their money to these kinds of games know the odds, know the risks, and have a thought: what if I’m one of the inner circle winners, let’s try this, I might make a huge profit!
As the pyramid scheme mechanism works, latecomers’ money goes to the top members’ – early adopters’ – pockets. Could the same happen in stock markets – in real estate business? Is the role of a latecomer always to make a loss?
[Update 12.12.2008] Yes, it can happen on stock markets also. WSJ article: Top Broker Accused of $50 Billion Fraud – His Investment-Advisory Business for the Wealthy Was ‘Giant Ponzi Scheme’