Online is a kingdom where crime does pay for scammers

Have you ever had someone come to you with an opportunity that will allow you to make more money than in your wildest dreams? Did you think to say that if it sounds too good to be true, then it probably is?

Not all rip-off schemes come by way of an email from Nigeria. Many will come via an earnest friend who has discovered this amazing opportunity that is going to make him or her a fortune - no risk, only the huge profits.

You are urged not to tell your accountant or lawyer, because they won't know about this kind of deal, and will only be jealous.

It is limited to a select few who are in the know - just like the big money overseas: the Rothschilds, Bilderbergers or the corrupt New York bankers, who make untold millions because they know the secrets of how wealth is created. Secrets which are not normally available to the average bloke.

Apparently, no one else knows these secrets ... well, certainly no one that you will know. A not especially observant onlooker may have noticed a herd of pigs flying past while the story was being told.

Some really "lucky" people have been invited to a seminar on wealth in Fiji, or some other luxurious retreat. At their own expense, or course. For their investment they were promised the secrets of how to create their own fortune - to retire rich. Then, when they had learned the secrets, they were offered a share of the best "fund" going. It may have promised interest of as much as 25 per cent or even 40 per cent per month.

On a website they were able to watch their own account in the fund growing month by month at a prodigious rate. It was growing so fast, in fact, that they were loath to withdraw any of their money because then they would miss out on the next month's interest. At 25 per cent or more per month, that was too tempting.

So they didn't withdraw any of their money. Then one day they went online to view their "account" and, guess what? The website had been closed down, and the fund manager had scarpered. Our heroes had only ever dealt with those people online, so they had no way of tracing them. It was all fictitious. All gone.

While not so prevalent these days, what I have described is a classic "Ponzi" scheme, named after the originator of these schemes, Carlo Pietro Giovanni Guglielmo Tebaldo (Charles) Ponzi, an Italian-born American businessman.

Spread by word of mouth, offering huge rates of interest, using the money coming in from new investors to pay out the few investors who wanted to withdraw their money early. Usually, when a satisfactory amount of profit is reached, the fund managers take all the money and disappear.

Why is this relevant to you? David Ross, from Ross Asset Management Ltd, is facing charges of allegedly running that kind of scheme from his Wellington office. Investigators have so far found only $10 million worth of assets to back up the about $450 million of investment given to him by people who trusted him.

Internationally-speaking, this is quite modest. Bernie Madoff, in the United States, has gone to prison for a long, long time for cheating US$65 billion out of many people, including his friends - or former friends.

Unlike Madoff, mostly these people don't get caught because they operate over the net - remotely, from a magical kingdom far, far away. A kingdom where crime does pay.