Contents: 1. An Outline of the Book 2. How do Ponzi Schemes Work? Comparing them to Other Financial Activities 3. Charles Ponzi’s Scheme Re-examined 4. Bernard Madoff and the ‘Mother of all Ponzi Schemes’ 5. Allen Stanford: The Cricketing Impresario 6. Five Other Case Studies: From Shaking Down the FBI to Bitcoin Fraud 7. Preying on the Amish 8. What can Behavioural Finance Tell Us? 9. What Would Psychologists Say? 10. What Can be Done About Ponzi Schemes? 11. Summary and Conclusions Index
Mervyn K. Lewis, Emeritus Professor, University of South Australia and Emeritus Fellow, Academy of the Social Sciences in Australia
‘This book offers highly valuable information about Ponzi schemes.
The writing is clear and well organized, and it is an excellent
work not only for academic researchers, policy makers, and
students, but it can also be valuable to general readers.’
*Yiyan Li, Criminal Law and Criminal Justice*
‘. . . more than two dozen books on Ponzi schemes have now been
written, but Understanding Ponzi Schemes provides a most
informative and detailed analysis of this phenomenon based on the
author’s theoretical analysis and empirical case studies. . . .
The subject of Lewis’s Understanding Ponzi Schemes is significant,
as Ponzi schemes are a kind of investment fraud that occurs
frequently around the world. . . He does a superb job of offering a
systematic description of what Ponzi schemes are, how they
happen, why people fall for them, how they are able to survive
for long periods of time, what we can do to avoid being victims,
and ways of preventing them. . . . On the whole, this book offers
highly valuable information about Ponzi schemes. The writing is
clear and well organized, and it is an excellent work not only for
academic researchers, policy makers, and students, but it can
also be valuable to general readers.’
*Criminal Law & Criminal Justice Books*
‘The short, well-referenced volume is an invaluable arrow in the
quiver of finance scholars, regulatory agents, financial advisers,
and other public policy officials. But it is also, not unlike the
topic itself, an engaging, very readable look inside this
fraudulent world. Summing Up: Highly recommended.’
*A.R. Sanderson, Choice*
‘Ponzi schemes are a particularly vicious form of financial fraud,
in that the overly trusting victims, who are often wiped out,
typically share an affiliation with the fraudster. They are
interesting, in that they share some features with legitimate
financial phenomena (such as stock manias) and shed light on the
human tendency towards behaving foolishly, especially when
encouraged or modeled by others. In Understanding Ponzi Schemes,
Mervyn Lewis has written what is probably the best and most
comprehensive book on the topic. Extremely readable, this book uses
both theoretical models and real-life case studies to provide
readers with an answer to two questions: “How do Ponzi schemes work
and why are they successful?” Lewis also provides useful answers to
a third question: “What can regulators and individuals do to be
protected from future incarnations of Charles Ponzi?”’
*Stephen Greenspan, University of Connecticut, US and author of
Annals of Gullibility*
‘Starting with very readable (and well-referenced) accounts of
various Ponzi fraudsters from Ponzi himself through to Madoff and
Stanford, lessons are drawn from such diverse disciplines such as
psychology and statistical analysis to advocate novel approaches to
the regulation of Ponzi schemes. A “must read” for regulatory
policy-makers and a fascinating read for the general reader,
Professor Lewis is to be congratulated for advancing the debate on
this age-old phenomenon by suggesting distinctive and innovative
strategies to tackle it.’
*Eva Lomnicka, Dickson Poon School of Law, King's College London,
UK*
‘Readers looking for a clear explanation of how Ponzi schemes work
and description of recent and historical examples, both large and
small scale, will find that in this very readable book. But the
author, Professor Mervyn Lewis, goes well beyond those topics by
drawing on behavioural economics and psychology to help understand
how “victims” get caught in such schemes, and the motives and
behaviours of the scheme operators. That analysis also provides a
valuable checklist for readers to help them avoid becoming
victims.’
*Kevin Davis, University of Melbourne, Australia*
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