A pyramid scheme is an unsustainable and sketchy business model where the top-level members promote the business to recruit new members. Those members are expected to pay a certain amount to those who registered them. Members often promote the business via different social media platforms, conference calls, group presentations, company websites, and other ways. For instance, an East Coast entrepreneur lures several investors with promises of lucrative profits when it doesn’t exist in reality. Read on to find out some of the most notorious pyramid schemes that were successful.
Ponzi amassed a fortune of around $15 million within eight months by convincing members he could make them wealthy by investing in international postal reply coupons. The scheme works by taking money from a new investor to pay an old member.
Although the man facilitated the growth of platinum-selling boy bands – NSYNC and Backstreet Boys, Lou Pearlman also established a massive Ponzi scheme. Pearlman swindled banks and investors for an estimated amount of $300 million.
Gerald Payne and Greater Ministries International
Gerald Payne and his management team at Greater Ministries International Church convinced more than 20,000 investors to hand over lots of money in millions in a program tagged as “Double Your Blessings.” The IRS stated that it was one of the biggest Ponzi schemes in the 1990s.
Reed Slatkin is one of EarthLink’s founders, the internet service provider that was established in the mid-90s. Nevertheless, Reed Slatkin’s Ponzi scheme started long before the company was founded. The pyramid scheme defrauded its investors of more than $500 million spanning over a decade.
Scott Rothstein used his law firm to launder and promote his massive $1.2 billion Ponzi scheme. The Miami Herald stated that Rothstein convinced his investors to make money via the bogus legal settlements.
According to New York Times, Entrepreneur Tom Petters was accused of siphoning money from missionaries, pastors, and hedge funds. Petters convinced these people that if they invest in his organization, it will help fund the acquisition of retail merchandise that would later be sold to discount retailers to make a profit.
Several pyramid schemes have been considered as the most notorious schemes that existed on the planet. The entrepreneurs who founded these pyramids include, Tom Petters, Scott Rothstein, Reed Slakin, Lou Pearlman, and so forth. Prospective investors should get a little business training before pursuing high risk ventures.