International Law

Why Can't We have Better Reporting about Ponzi Schemes?

Here is the lead to the CBC news story about the Calgary ponzi scheme:

A Calgary couple who lost a "good portion" of their life savings in an alleged Ponzi-type scheme don't expect to see their money again.

Helmut and Genie Vollmer said they lost at least $350,000 invested in what they thought was a gold mining company that promised a rate of return of between 35 and 40 per cent.

We instantly lose any sympathy we had for the Vollmer's because after all didn't they know the great fraud prevention slogan: it is too good to be true.

Here is what is too good to be true: that fraud schemes are clearly identifiable as too good to be true.  Here is a logical proof of the fact that frauds cannot self announce: "I am too good to be true."  I call this the Regulator Fallacy.

Let's look at the rest of the story:

"The couple saw their investments grow on paper, but started having their doubts about a year and a half ago when the statements stopped arriving in their mailbox and they couldn't contact the company to make small withdrawals on their investment.

Genie Vollmer recalled a standing-room-only meeting in a hotel where Brost tried to ease investors' concerns.

She said she had no idea so many people were involved, because they were told not to talk about their investment."

Whoa! Told not to talk about their investment?  

How did this pitch work?  Because it didn't happen without the Vollmer's signalling to the con criminal that they would abide by this directive.  

But the reporter has already got the "too good to be true story", so he or she doesn't ask any more questions about this angle.

Why can't we have better reporters who cover fraud?  Do they have to be people with no psychological training or curiousity?

Why can't we have better reporting of fraud?  Does every reporter have to laugh up his sleeve about the victims?  

Could we not have someone with an ounce of training in persuasive techniques to unfold the story?

Full post as published by Misleading Advertising Law on September 16, 2009 (boomark / email).