More Ponzi Schemes Surface, Accused Earn the Name "Mini-Madoff"
Since the Bernie Madoff scandal and his loss of $50 billion in investor money, Ponzi schemes have been popping up left and right. Numerous "Mini-Madoffs" appeared after skeptical investors requested their returns.
According to the Houston Chronicle, the deteriorating economy and nervousness after the Madoff scandal has caused investors to request their returns, shining light on the schemes. Stephen Obie of the Commodity Futures Trading Commission (CFTC) explains, "There is no way for a Ponzi scheme to survive given the large number of redemptions and a lack of new investors." Before, schemers could take money from one investor to pay the other; now, there isn't enough money in the pot to continue playing the game. In the last year CFCT has seen double the leads to possible Ponzi schemes and has brought cases involving over $200 million since last October.
Last Monday, Nicholas Cosmo was arrested in a New York train station in connection with a suspected $380 million Ponzi scheme. Although Cosmo had already served time for securities fraud, 1500 people willingly gave him $20,000 for supposed high-yield "private bridge" loans. Also, in Florida, naive investor Reggie Roseme was duped by George Theodule, a "man of God" who promised churchgoers double their money in 90 days. Roseme gave the "mini-Madoff" his life savings of $35,000 in cash, as did many others from the near by Haitian-American community. With beautiful offices and a too-good-to-be-true sales pitch, Theodule managed to collect tens of thousands from many investors.
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