Ponzi schemes: No exit strategy

Hey Ponzi: What’s Your Exit Strategy, Exactly?


I have never understood why someone would ever start a Ponzi scheme when, by definition, there’s no way to end it.

The scam works by bringing in new unwitting investors to pay off the old unwitting ones. Since there’s no actual investment involved — just a transfer of money backward, with some portion presumably pocketed by the Ponzi schemer — keeping the scheme going requires an endless supply of new investors. The schemer’s liabilities only get bigger as time goes on, and there’s no way to end the ploy. Other than jail, that is. Or death. Or perhaps faking one’s own death.


I recently asked a few experts what such Ponzi perpetrators might envision their “exit strategies” to be.:

  1. Cut and run.
  2. Turn (or return) the business into something legitimate. Unlike the schemers in #1, these Ponzi architects likely started out with some hope for legitimacy. They wanted seed money to kick off some brilliant investment idea.
  3. No exit. These schemers, usually from relatively humble backgrounds, are deeply insecure. They have felt like impostors their whole lives, whether in the country club or on the trading floor. They expect to be exposed for something, sometime, somewhere, which allows them to rationalize fraudulent behavior. They focus on denying and delaying the inevitable for as long as they can — and living well until they get caught.

Comment: There's a fourth strategy as well - read the article. Famous Ponzi schemers: Bernard Madoff, Tom Petters, Gerald Payne of Greater Ministries International, Bill Crotts of the Baptist Foundation of Arizona, and the Father of them: Charles Ponzi. On the other end of a Ponzi scheme is a greedy sucker.


  1. Does "three hots and a cot" count as an exit strategy? :^)

    Seriously, methinks the ordinary practicioner hopes he can ride off into the sunset without being caught, tarred, and feathered.

  2. Kathee and I watched the "American Greed" episode on "Greater Ministries International" Tues night on CNBC.

    There were a lot of foolish, greedy Christians (so called) that forked over thousands with the promise of their money being doubled. Not satisfied with say a 5% return in a safe investment ... they took the bait to double their money.

    I should have added Enron and Worldcom to this although not true Ponzi schemes


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