Ponzi Schemes....

So there I was reading some stories on Neatorama about the infamous ponzi schemes directly related to the current Madoff incident. This reminded me of a similar deal that happened down in Costa Rica. The CR thing was an interesting story, collapsing just previous to my arrival. I never really knew the whole deal but I was surrounded by the people effected. Retirees. Older women, the ones who came down with their complete saving to drink margaritas amongst the young surfer beach dudes and relax in the sun. Fail. They all lost it all.

As the wiki article here states:

"The Brothers was a large investment operation, eventually exposed as a Ponzi scheme, in Costa Rica from the late 1980s until 2002. The fund was operated by brothers Luis Enrique and Osvaldo Villalobos. Investigators determined that the scam took in at least $400 million. Most of the clientele were American and Canadian retirees but some Costa Ricans also invested the minimum $10,000. About 6,300 individuals ultimately were involved. Interest rates were 3% per month, usually paid in cash, or 2.8% compounded. The ability to pay such high interest was attributed to Luis Enrique Villalobos’ existing agricultural aviation business, investment in unspecified European high yield funds, and loans to Coca Cola, among others. Osvaldo Villalobos’ role was primarily to move money around a large number of shell companies and then pay investors. In May 2007 Osvaldo Villalobos was sentenced to 18 years in prison for fraud and illegal banking. Luis Enrique Villalobos remains a fugitive."

Yikes. All this makes the idea of real estate pretty strong. Im hiding all my money in foreign cars in the driveway. Should work well over the long run I think....