The Ponzi scheme never gets old:
Tell anybody who'll listen that you've got an investment that's guaranteed to earn a nice, steady return. When investors give you their money, use it to buy something nice for yourself!
Then get some other investors to give you their money. Spend some of it on yourself. Give the rest to your original investors, and tell them it's interest on their investment.
Keep this up for as long as you can!
Kenneth Starr, financial advisor to the stars, allegedly ran a Ponzi scheme and used his clients' money to buy himself a $7.6 million condo, the U.S. attorney and the SEC said today.
(This is a different Kenneth Starr than the special prosecutor in the Clinton-Whitewater case, by the way.)
This story is getting lots of play because of the celebrity angle — Sylvester Stallone, Annie Leibovitz and Uma Thurman are all current or former clients.
But what's remarkable about Ponzi schemes is how common they are. They're so common, in fact, that usually you don't hear much about them.
Yesterday, for example, a former city commissioner in Delray Beach, Florida, was arrested for defrauding investors out of nearly $2 million in a Ponzi scheme, the AP reported. She allegedly gave some of the money to the "future home of the Museum of Lifestyle and Fashion History," run by her daughter.
Also yesterday, a former Chamber of Commerce president in Hayward, California was sentenced to 17 years in prison for embezzling $1.7 million in a Ponzi scheme, according to the Contra Costa Times. His victims included some elderly people who'd known him since he was a boy.
And on Tuesday, a Denver-area financial adviser was sentenced to 15 years in prison for running a $32 million Ponzi scheme, the Denver Post reported.
"I just want to say how sorry I am for the pain and suffering I've caused everyone in this courtroom," the man said before he was sentenced. "Nothing I did was with malicious intent, but I made a lot of mistakes."