We started this blog as a source of helpful tips and timely training for the network marketer.  We never intended to become watchdogs like Rod Cook or Troy Dooly or Lou Abbott, who all do excellent jobs of keeping an eye on our industry and our best interests at heart.  Occasionally, though, one of the scams that pop up regularly catches our attention more than usual, especially if we see good people being lured down the pyramid path by promotions on InYourFaceBook.

Learning how to recognize the difference between a pyramid and a legitimate business could be one of the best skills a networker can learn.  Not losing $10000 in a Ponzi is just as good as earning $10000 in a legitimate business.

We recently wrote an article about Royalty7 which claims to be a private investment and wealth management company, promising laughably large returns in HYIP ventures.  We got far more reaction from our criticism than from most other helpful articles we’ve written.  It was like turning over a rock in the daytime to see the creatures of the night scuttle away or stand and snap and snarl.  You can read one such reaction as a comment on the article.  The others have been too nonsensical and messenger killing to post.

These two definitions of Ponzis and HYIP’s come from Wikipedia …

A Ponzi scheme (named after Charles Ponzi) is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from any actual profit earned by the individual or organization running the operation … (read more in our article Charles Ponzi Is Alive And Well)

A high-yield investment program, HYIP, is a type of Ponzi scheme, which is an investment scam that promises unsustainably high return on investment by paying previous investors with the money invested by new investors.  (Read more at Wikipedia)

Here is our reply to an unashamed supporter of the scam, and an open letter to all who knowingly participate in a pyramid or Ponzi:

“Let’s be clear.  In a Ponzi you do not ‘make’ money, you collect money. In order to make money, you have to provide goods or services, and earn commissions from the difference between wholesale and retail. In this Ponzi, no goods or services are changing hands. Only money is changing hands, and you are collecting it straight from the pockets of newbies.

You may want to rationalize your actions by your earnings.  The amount of money you have collected has absolutely no bearing on the legality of the scheme. Madoff collected money, but it didn’t make his scam legal and he still went to prison. Ponzi collected money and still went to prison. We hope you are prepared to join them, as the authorities are no longer charging just the organizers of the scam.

You may want to rationalize your actions by pointing a finger at others who are involved now or have been involved in the past.  When the police arrive at your door, imagine how much attention they will pay to you hollering, “Hey wait a minute!  My cousin Billy and another guy at work did this five years ago!  Go get them!”

There’s no point in writing in to this blog trying to convince US, as we do not own the handcuffs. We challenge any of you Ponzinians to take the whole business plan and all your records to your local AG to see what they say. Take your pyjamas too, as you may not be going back home. So far, nobody has taken us up on that challenge, but would rather rant about what a great deal they have found. 7% daily? Grow up.  Look around.

It’s a puzzle to us that you do not mind getting involved in illegal activities, but take great offense at any criticism of your behavior.  If your business model cannot stand up to an opinion, how will it stand up to scrutiny by the Attorney General?  Take it to them, not us.  Stop killing the messenger and go to the people who can tell you if you and your family are safe.

You are absolutely right that it is “not a traditional business.” A Ponzi is not a business at all. It is a scam that hurts thousands and thousands of people who can ill afford to lose their money.

If the “new outlets” you are exploring involve taking money out of the pockets of unsuspecting others, you might want to reconsider your ethics. Before you take your plans to the AG, you might want to stop by your church and show them to your minister or priest or rabbi or imam and the entire congregation. If you get their approval and can still sleep at night, perhaps you have found your niche.

We will continue to warn people about you and your fellow parishioners at The First Church of The Perpetual Pickpocket.”

If you want to understand the MLM and network marketing industry and learn how to keep you and your family safe from all the scams out there, read Big MLM Truths.

Bob and Anna Bassett
Skype bobbassett