Charles Ponzi, Bernie Madoff and, well, fill in the blank.
Swindlers who pretend to invest the money of their victims are still doing brisk business. There’s the Bitcoin Ponzi scheme, the fake venture capitalist Ponzi scheme and even the “Hamilton” ticket Ponzi scheme. Same toxic ingredients, slightly different packaging.
David Wall, CPA at the CliftonLarsonAllen accountancy firm in Los Angeles, represented the District Attorney’s office in the Ryan Rude Ponzi scheme. Few people have heard of Ryan Rude. He didn’t get much media coverage. The reason? Wall said it was only $5 million dollars compared to Bernie Madoff’s $64.8 billion Ponzi scheme. “It is just one of many.”
But the two criminal enterprises have one thing in common: Many of the victims invested their life savings. Rude, who was sentenced to 26 years in prison in 2013, will be eligible for parole in 2033 when he is 60 years old. He was ordered to pay $2.9 million in restitution. “It’s highly unlikely that any amount of that will be paid,” Wall said. (Some $3.9 billion has been returned to 35,000 Madoff victims from third parties in the largest civil forfeiture in history.)
‘People continue to be very trusting and not do the level of due diligence. If you don’t understand it after a five-minute conversation, don’t invest in it.’
There are a dozen or more people or organizations charged with Ponzi schemes every month, according to Kathy Phelps, who catalogues them on her blog, The Ponzi Scheme Blog. Phelps, the author of “Ponzi-Proof Your Investments,” said, “People continue to be very trusting and not do the level of due diligence. If you don’t understand it after a five-minute conversation, don’t invest in it.”
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Wall agrees that the American public still has a lot to learn about fraudsters peddling the same old tricks, packaged slightly differently. “You would think the investing public would become savvy, but it doesn’t appear to be happening,” he said. Wall will make a presentation at the American Institute of Certified Public Accountants 2017 Forensic and Valuation Services Conference, which will be held between Nov. 13 and Nov. 15 in Las Vegas.
MarketWatch spoke to Wall about how Rude got so much money from unsuspecting investors, the red flags they missed and how he shook lower middle-class people down for hundreds of thousands of dollars even though they had little or no money in the bank.
MarketWatch: Was Rude a smart guy?
Wall: Ryan Rude was a doofus. When his fraud was uncovered, he became hostile and blamed his own victims for the catastrophe that occurred.
MW: What tricks did he bring to the table?
Wall: He had excellent soft skills. That is, he was very nonthreatening. His investors trusted him. They liked him. He was able to create a feeling of comfort and connection with his victims.
‘You would think the investing public would become savvy, but it doesn’t appear to be happening. One of the common characteristics seen in Ponzi…