[GUIDE] White-Collar Series: The Ponzi Scheme

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Sonny-G
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[GUIDE] White-Collar Series: The Ponzi Scheme

Post by Sonny-G » Mon Jan 21, 2019 2:33 pm

1. Abstract:

Four months have passed since Anthony Caracciolo, the last member of the Caracciolo enterprise, was character-killed. Thus, I believe that sharing my personal experience and the methods used could be beneficial for players willing to roleplay heavily around white-collar schemes.
As a matter of fact, the Caracciolo&Associates company got in business with a $200,000 capital and was able to generate $6,000,000 cash in addition to several properties in less than a month by using an elaborate Ponzi scheme.

Some victims were able to recover their money OOCly after the fall of the Caracciolos, but for the rest, I hope that no player report will result from this educational testimony :D . It is very important to note that partaking in white-collar criminality must be focused on roleplay before anything else as the short prison terms (I personally got 4 hours and ran away with all the money) make it unfair for the victims once the scheme has been uncovered.

2. Ponzi Scheme: Definition

First and foremost, what is a Ponzi scheme? Investopedia, the reliable dictionary for finance and business advances a simple and straight-forward definition of the concept that was used by the likes of Charles Ponzi, Bernard Madoff and Jordan Belfort (The Wolf of Wall Street).



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3. Building a Trustable Front-Office
Do not focus on profit during this first step!!

It is really important to keep in mind that Ponzi schemes are conducted by companies under a legal status. The first step is to build a company from scratch and operate it as any other legal firm. The initial operations must therefore work on the company's reputation and public relations.

a- Work on a concise and attractive website (business/faction thread) for your company.

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b- Recruit capable and active roleplayers who contribute to office roleplay in a realistic manner: Holding meetings, sending professional e-mails...etc.
The employees should not be aware of the on-going Ponzi scheme as their lack of knowledge makes them more focused on building the company's image.
Dividing the company into different branches (HR, Accounting, Marketing...) will grant the employees different tasks and missions and prevent them from roleplaying with each other and sharing their suspicions.
Moreover, when potential investors and partners are invited to your office, they must stumble upon a fully operational firm that is professional and capable. Every single detail counts, from the initial "Good evening" to the way the contract is layed on the meeting table.

c- Build an extensive portfolio of clients: Attend social events, business openings, exchange numbers and always track the new companies in the businesses sub-forums. I personally owned a bar and put a lot of effort into promoting it as a hub for investors and businessmen.
As the bar started growing in popularity, several businessmen and investors from the city started coming over to meet with Caracciolo and discuss business opportunities, giving him the chance to promote his firm and sell shares.

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It is also very important to live a flashy lifestyle, drive an expensive car and only hang out in luxurious businesses. Because otherwise, would you trust a finance consultant promising wealth and financial expansion while driving a Manana?

d- An accurate set of information should be available and technically explained using advanced knowledge of the investment field. OOC knowledge and research plays an important role in this part. I personally recommend Investopedia as an initial step to understand concepts. However, for practical and technical operations, a more advanced knowledge of corporate finance, Microsoft Excel macros and micro-economics is required. For the purpose of roleplay, the concepts could be simplified but the overall logic must still be fully understood by the Ponzi Schemer.

> Stocks Basics: What Are Stocks?
https://www.investopedia.com/university ... tocks1.asp

> How a Corporation can Issue Shares.
http://bradshawlawgroup.com/how-a-corpo ... al-shares/


4. Marketing

In a Ponzi Scheme, every single dollar counts. Reaching out to the masses might get you additional investors (even though less generous) which contributes to extending your portfolio.
Picking the right allies such as media groups, Influencial citizens, politicians...etc. also constitutes an important part of Ponzi scheming as they unwillingly contribute to scheming more people and working your own interest.


https://forum.ls-rp.io/viewtopic.php?f= ... &p=8734791
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5. Generating Profit

In this part, I will discuss how IG cash is eventually generated upon reaching the maturity stage of the company. This can be defined as:
- Owning enough assets to backup your words (The potential investor must see tangible proof of your financial success).
- Joining an extensive network of corporations and individual investors. = Not having to introduce yourself or explain the mission of your company.

As a graduate engineer in corporate finance, I was able to setup an Excel system based on real-life accounting standards. Everything was fine on the surface, however, it only takes a few minutes and knowledge of the finance equations to detect the flaws of the system.

a- Accounting reports:
The accounting reports contain anything from the simple expenses to multi-million investments and returns. Making the reports public through Google Sheets such as the one below, will keep your investors up-to-date in terms of the company's "well-being".

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The highlighted areas are the ones in which the incremental equation was implemented, putting the stock value on a positive slope. On the other hand, the expenses were sometimes exaggerated in order to fake a stock value drop and preserve a natural change in the market.

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b- Issue dividends:
Dividends are periodical payments that are made by the company to its shareholders during financial prosperity. The company issues a public statement in which the dividend value is made public. For example: $200/share.
Dividends serve the purpose of reassuring your investors of your good intentions and calming their suspicions. You cannot imagine how a simple payment of $16,000 is enough to bring assurance and recomforting an investor who has put $1,500,000 into your company.

c- Laundering the money:
Finally, cashing out from the scheme is a very simple process.
First, a huge investment is required such as buying several cars, a huge house or even convincing the investors that the company-owned bar needs a new design. The following are actual operations that were conducted during the "cashing-out" period of the C&A company, leaving several investors out of their money.

> Buying tangible assets (cars, houses..)
In this case, a huge transaction is made. Let's say, a house in Las Colinas was purchased for $4,000,000. A few weeks later, the company sells the house for $4,000,000 but reports $2,500,000 only ($1,500,000 go into the owner's pockets). The loss is then justified to the investors by the sudden real estate market drop.

> Reverse money laundering
You already know what money laundering is, right? Reverse money laundering is simply the same process but in the opposite direction. The money is used to buy drugs and weapons that are then stored somewhere to finance future transactions.

> Investing in a new design
Reworking the company's bar design surely brought a lot of profit to the company. The Rustik bar tripled its revenues in no time.
While the new design only cost $300,000, it was reported as a $1,500,000 design which was very convincing due to Michael Levan's beautiful work on the interior.
The future revenues were divided into three parts with only 1/3 reported to the investors. On the other hand, the 2/3 went straight to Caracciolo's bank account.


This guide only serves the purpose of explaining the process of a Ponzi Scheme and used actual in-character events in the explanation of the practice. The methods used and unlawful tricks that were incorporated in the Caracciolo&Associates' stock market constitute a microscopic portion of the vast array of possibilities that exist. At the end of the day, your imagination and criminal mind are the most important elements in the success of your Ponzi Scheme.

If you have any questions or need guidance to setup a scheme, do not hesitate to send me a PM.
Last edited by Sonny-G on Mon Jan 21, 2019 5:40 pm, edited 1 time in total.

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Gary
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Re: [GUIDE] Ponzi Scheme: White-Collar Criminality

Post by Gary » Mon Jan 21, 2019 4:11 pm

dope
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"I'll burn it all down if I can't have it."

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sick
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Re: [GUIDE] Ponzi Scheme: White-Collar Criminality

Post by sick » Mon Jan 21, 2019 4:13 pm

Top notch.

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Re: [GUIDE] Ponzi Scheme: White-Collar Criminality

Post by cocaineking89 » Mon Jan 21, 2019 4:30 pm

How did it turn out for you with the scamming rules? 50K. Or was it counted as "loaning" and you could get away with it without any OOC problems? Very interesting and sophisticated, this was the only bump I could think of.

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Sonny-G
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Re: [GUIDE] Ponzi Scheme: White-Collar Criminality

Post by Sonny-G » Mon Jan 21, 2019 4:35 pm

cocaineking89 wrote: โ†‘
Mon Jan 21, 2019 4:30 pm
How did it turn out for you with the scamming rules? 50K. Or was it counted as "loaning" and you could get away with it without any OOC problems? Very interesting and sophisticated, this was the only bump I could think of.
It was not protected by the scam rule in the sense that investors have voluntarily put their money into the company to generate return and personal gain (on the basis of a long-term investment). It uses the same logic as the loaning example you have mentionned.

Bierhoff
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Re: [GUIDE] White-Collar Series: The Ponzi Scheme

Post by Bierhoff » Tue Jan 22, 2019 1:17 am

Genius.

PM If needed.

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Morenos
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Re: [GUIDE] White-Collar Series: The Ponzi Scheme

Post by Morenos » Wed Mar 11, 2020 7:29 am

Savimg this
Learn like you'll live forever, live like you'll die tomorrow.

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Re: [GUIDE] White-Collar Series: The Ponzi Scheme

Post by Paris_Newman » Thu Mar 12, 2020 12:01 pm

Didn't notice this pile of gold till now.

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Sonny-G
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Re: [GUIDE] White-Collar Series: The Ponzi Scheme

Post by Sonny-G » Sat May 09, 2020 7:36 pm

After being away for quite some time, I logged on today to find several forum members asking me about how to set up ponzi schemes. I will be making a simplified process along with a theorical scenario over this thread very soon.

Stay safe!

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Re: [GUIDE] White-Collar Series: The Ponzi Scheme

Post by Afer » Tue May 26, 2020 5:55 pm

Dope stuffs!
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KalleNz0r
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Re: [GUIDE] White-Collar Series: The Ponzi Scheme

Post by KalleNz0r » Thu Jun 04, 2020 11:53 am

Woah.

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Re: [GUIDE] White-Collar Series: The Ponzi Scheme

Post by Summrs » Thu Jul 02, 2020 11:47 pm

This is it, chief.

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