The article discusses different types of fraud, including crooks who use deception to gain money, medical shows in the 19th century that sold fraudulent cures, and scams that rely on gaining the trust of brands. It also explains Ponzi schemes, pyramid schemes, and multi-level marketing, and gives an example of a large-scale Ponzi scheme carried out by Bernard Madoff.
A crook is a type of salesman who deliberately uses deception to gain money, fame, or power. Also called a crook, a fraudster can use security tricks on his audience to get them to do what he wants them to do. Synonyms for crook include the words charlatan and charlatan.
In the 19th century, medical shows traveled throughout the Midwestern and Southern United States, offering “cures,” for a price, for just about every ailment imaginable. These shows typically consisted of entertainment such as sideshows, flea circuses, musical acts, and magic tricks prior to the sales launch. People have been duped into buying a variety of goods, none worth what they paid for or able to do what they were promised.
A scammer commits the crime of cheating. The legal definition of fraud may vary in different legal jurisdictions, but a general definition of fraud requires that the deception be intentional and deliberate. The deception must be done with the intended result of an undeserved benefit to the fraudster. Penalties may vary by jurisdiction.
Trust tricks work by gaining the trust of the brand, the person the scammer is trying to defraud. By getting the brand to trust him, the scammer can use that trust to his advantage. When selling a fraudulent product, pseudoscience is often used to convince the brand of the product’s value by citing false statistics.
Another tool a scammer could use is called a Ponzi scheme. A Ponzi scheme is an operation that relies on the ingenuity of brands, usually by promising high returns on their investments. It pays investors back with its own money or other investors’ money rather than profits from operations. Pyramid schemes and multi-level marketing (MLM) methods are similar money-making operations that can be used to fraudulently earn money from people, but pyramid schemes collapse from the need for exponential growth of investors, while Ponzi schemes are government generally shut down before it reaches that stage.
In 2008, Bernard Madoff, a former president of the NASDAQ, confessed to having carried out the largest investor fraud committed by an individual, a large-scale Ponzi scheme. Madoff worked with exclusive clients, delivering consistent modest returns instead of high returns, and marketed his investment strategy as too complicated for others to understand. The estimated amount of money withdrawn from investors was $64.8 billion US dollars (USD). Madoff was sentenced to 150 years in prison and ordered to pay $170 billion in restitution.
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