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If It Sounds Too Good Too be True, Then You’d Better Watch Out!

By Rabbi Eli Teitelbaum

From time to time I get calls from friends asking for my opinion about certain business deals or ventures that they would like to get into. My answer is usually the same. I know little about business and they should rather seek the advice of a good lawyer and accountant. Yet there is one piece of advice that I do give them. If it sounds too good to be true then it’s probably a swindle. This one piece of advice is worth its weight in gold and will usually keep people from falling into Ponzi scams, MLM pyramid schemes and other crooked deals. If you will resist the promises of that pot of gold at the rainbow’s end, than perhaps you’ll shield yourself from the advances of most con artists. The only thing you may find at the end of a rainbow is a pot of worms.

How sad that every few months one hears another hair raising story of scam artists conning even some very clever people out of hundreds or even millions of dollars. These con artists have no shame or guilt feelings and will take even the last dollar from those that can least afford it, leaving even the widow, the sick or the destitute, penniless.  Unfortunately, desperate people are ready-made marks for the con artist. I have often witnessed firsthand the tremendous devastation and human suffering caused by these scam artists.  They don’t think twice about promising their victims the world and giving them only heartaches in return.

Its time we realize that there is no such thing as easy money and for every person that wins the lottery there are millions that lose. While buying a few lottery tickets is just a small gamble, investing thousands of dollars in a business that offers pie in the sky returns can be devastating.

Here is a story that should confirm to you just how much larceny is out there kicking around in the hearts of investment advisors. This is a true story taken from a book titled "The Definitive Guide To Futures Trading," by Larry Williams. In the mid-1970's, a registered investment advisor I personally know sent out a market letter to 5,000 people telling them to buy soybeans. To another 5,000 people, the same investment advisor sent out a letter telling them to sell soybeans. I can't recall the exact details, but let's say soybeans went up. He, of course, did not send out any more solicitations to the people whom he told soybeans would go down, but he did divide the 5,000 names in half and sent two more letters. One letter said now it was time to buy pork bellies: the other letter said it was time to sell pork bellies. pork bellies went down. He then had 2,500 people who had seen him right on soybeans and right on pork bellies, so he sent out 1,250 letters to half of that group telling them that his next trade was silver. Buy it, it was going higher. To the other 1,250 people he sent out a market letter telling them it was time to sell Silver. Silver went up. To 1,250 people, our investment advisor looked like a hero, he had three major trades in a row correct. Now came the sales pitch. To those 1,250 people he offered a special subscription to his yearly market letter for only $500, which was an absolute pittance compared to the profits one would have made if he had taken the advice of the investment advisor on the last three trades

Some  scams are called "Ponzi schemes," named after Charles  Ponzi who (in 1919) cheated people by taking their  money and investing  it  into non-existing ventures, or simply gambled other people's money away. He established good credit by returning lots of money to the first few investors thereby making others believe that he could be trusted and was good for his money. Little did they realize that this money was coming from the new investors he was now defrauding, and that the business ventures were pie in the sky!

The problem is that as soon as one Ponzi scam topples, a new one is there to take its place. The chance of recovering one's money is about as likely as discovering an oil well in your back yard. Other clever schemes are known as MLM's (Multi Level Marketing, like Jewel-Way, Winners Circle, Purchase Plus etc.) that promise you the moon, but only deliver heartaches.

Be especially wary of the stranger that suddenly befriends you and soon follows up asking for a loan which he then repays on time. Once he has your confidence, he'll bamboozle you for big bucks for which he'll give you a genuine rubber check in exchange.
While our schools teach us to be book smart, they rarely teach the street smarts. It’s shocking to see how trusting and naive some people can be. Last year an ad appeared in a paper offering  a return of 3,000% interest on ones money-a practical impossibility. Yet  I was appalled when I later found out that many people  had actually invested in this plan which of course  has now  gone bankrupt.

One of the ways to entice people is to pay the first few investors lots of money. As soon as word gets out that some people are making a fortune all the mice start running to the trap to get onto the deal. In every Ponzi scheme, the money from the new investors goes to pay the old investors. This scheme work so long as new suckers keep putting in more money. As soon as they run out of more investors the entire scheme comes crashing down like a bunch of dominoes lined up one against the other.

 It seems that these scam artists appeal to peoples hearts rather than their brains. When hard economic times set in, people look for something easy that will make them rich quick. It’s the unemployed and the poor that are most vulnerable. As the need and greed for money grows, the con artists are having a picnic. It’s time people take off their green tinted glasses and stop being blinded by the quick and easy money scams? Always remember! Not all that glitters is gold!


One mistake people make is to believe that they are too smart to be conned. Little do they realize that you don’t have to be old, greedy, needy or stupid to be taken to the cleaners.  A smooth talker with an honest face and charming demeanor can take even the very clever for a ride. Remember! A good con artist never looks like a con artist. A good con artist is like a chameleon and can easily camouflage his real intent. He uses his charm, earnestness, guile and seeming innocence, to gain ones confidence and then cheats them out of all they’ve got. Some of these swindlers pull off such perfect con jobs that their victims don’t even realize that they have been scammed. I do hope that these essays will prepare you for the real world out there.

1 comment:

  1. Just got my cheque for $500.

    Many times people don't believe me when I tell them about how much you can earn by taking paid surveys online...

    So I took a video of myself getting paid $500 for doing paid surveys.

    ReplyDelete