Monday 26 September 2011

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  • Pyramid scheme

    A pyramid scheme is a non-sustainable business model that involves promising participants payment, services or ideals, primarily for enrolling other people into the scheme or training them to take part, rather than supplying any real investment or sale of products or services to the public. Pyramid schemes are a form of fraud.[1][2]
    Pyramid schemes are illegal in many countries including Albania, Australia[3], Brazil, Bulgaria, Canada, China[4], Colombia[5], Denmark, the Dominican Republic[6], Estonia[7], France, Germany, Hungary, Iceland, Iran[8], Italy[9], Japan[10], Mexico, Nepal, The Netherlands[11], New Zealand[12], Norway[13], the Philippines[14], Poland, Portugal, Romania[15], South Africa[16], Spain, Sri Lanka[17], Switzerland, Taiwan, Thailand[18], Turkey[19], the United Kingdom, and the United States[20].
    These types of schemes have existed for at least a century, some with variations to hide their true nature, and many people believe that multilevel marketing is also a pyramid scheme.[21][22][23][24]

    Contents

    [hide]

    [edit] Concept and basic models

    A successful pyramid scheme combines a fake yet seemingly credible business with a simple-to-understand yet sophisticated-sounding money-making formula which is used for profit. The essential idea is that a "con artist" Mr. X, makes only one payment. To start earning, Mr. X has to recruit others like him who will also make one payment each. Mr. X gets paid out of receipts from those new recruits. They then go on to recruit others. As each new recruit makes a payment, Mr. X gets a cut. He is thus promised exponential benefits as the "business" expands.
    Such "businesses" seldom involve sales of real products or services to which a monetary value might be easily attached. However, sometimes the "payment" itself may be a non-cash valuable. To enhance credibility, most such scams are well equipped with fake referrals, testimonials, and information. The flaw is that there is no end benefit. The money simply travels up the chain. Only the originator (sometimes called the "pharaoh") and a very few at the top levels of the pyramid make significant amounts of money. The amounts dwindle steeply down the pyramid slopes. Individuals at the bottom of the pyramid (those who subscribed to the plan, but were not able to recruit any followers themselves) end up with a deficit.

    [edit] The "Eight-Ball" model

    Many pyramids are more sophisticated than the simple model. These recognize that recruiting a large number of others into a scheme can be difficult so a seemingly simpler model is used. In this model each person must recruit two others, but the ease of achieving this is offset because the depth required to recoup any money also increases. The scheme requires a person to recruit two others, who must each recruit two others, who must each recruit two others.
    The "eight-ball" model contains a total of fifteen members. Note that unlike in the picture, the triangular setup in the cue game of eight-ball corresponds to an arithmetic progression 1 + 2 + 3 + 4 + 5 = 15. The pyramid scheme in the picture in contrast is a geometric progression 1 + 2 + 4 + 8 = 15.
    Prior instances of this scheme have been called the "Airplane Game" and the four tiers labelled as "captain," "co-pilot," "crew," and "passenger" to denote a person's level. Another instance was called the "Original Dinner Party" which labeled the tiers as "dessert," "main course," "side salad," and "appetizer." A person on the "dessert" course is the one at the top of the tree. Another variant, "Treasure Traders," variously used gemology terms such as "polishers," "stone cutters," etc. or gems like "rubies," "sapphires," "diamonds," etc.
    Such schemes may try to downplay their pyramid nature by referring to themselves as "gifting circles" with money being "gifted." Popular schemes such as the "Women Empowering Women"[25] do exactly this.
    Whichever euphemism is used, there are 15 total people in four tiers (1 + 2 + 4 + 8) in the scheme - with the Airplane Game as the example, the person at the top of this tree is the "captain," the two below are "co-pilots," the four below are "crew," and the bottom eight joiners are the "passengers."
    The eight passengers must each pay (or "gift") a sum (e.g. $1000) to join the scheme. This sum (e.g. $8000) goes to the captain who leaves, with everyone remaining moving up one tier. There are now two new captains so the group splits in two with each group requiring eight new passengers. A person who joins the scheme as a passenger will not see a return until they advance through the crew and co-pilot tiers and exit the scheme as a captain. Therefore, the participants in the bottom 3 tiers of the pyramid lose their money if the scheme collapses.
    If a person is using this model as a scam, the confidence trickster would make the lion's share of the money. They would do this by filling in the first 3 tiers (with 1, 2, and 4 people) with phony names, ensuring they get the first 7 payouts, at 8 times the buy-in sum, without paying a single penny themselves. So if the buy-in were $1000, they would receive $8,000, paid for by the first 8 investors. They would continue to buy in underneath the real investors, and promote and prolong the scheme for as long as possible to allow them to skim even more from it before it collapses.
    Although the 'Captain' is the person at the top of the tree, having received the payment from the 8 paying passengers, once he or she leaves the scheme is able to re-enter the pyramid as a 'Passenger' and hopefully recruit enough to reach captain again, thereby earning a second payout.

    [edit] Matrix schemes

    Matrix schemes use the same fraudulent non-sustainable system as a pyramid; here, the participants pay to join a waiting list for a desirable product which only a fraction of them can ever receive. Since matrix schemes follow the same laws of geometric progression as pyramids, they are subsequently as doomed to collapse. Such schemes operate as a queue, where the person at head of the queue receives an item such as a television, games console, digital camcorder, etc. when a certain number of new people join the end of the queue. For example ten joiners may be required for the person at the front to receive their item and leave the queue. Each joiner is required to buy an expensive but potentially worthless item, such as an e-book, for their position in the queue. The scheme organizer profits because the income from joiners far exceeds the cost of sending out the item to the person at the front. Organizers can further profit by starting a scheme with a queue with shill names that must be cleared out before genuine people get to the front. The scheme collapses when no more people are willing to join the queue. Schemes may not reveal, or may attempt to exaggerate, a prospective joiner's queue position which essentially means the scheme is a lottery. Some countries have ruled that matrix schemes are illegal on that basis.

    [edit] Connection to multi-level marketing

    The network marketing or multi-level marketing (abbreviated MLM) business has become associated with pyramid schemes as "Some schemes may purport to sell a product, but they often simply use the product to hide their pyramid structure."[26] and the fact while some people call MLMs in general "pyramid selling"[27][28][29][30][31] others use the term to denote an illegal pyramid scheme masquerading as an MLM.[32]
    The United States Federal Trade Commission (FTC) warns "Not all multilevel marketing plans are legitimate. Some are pyramid schemes. It’s best not to get involved in plans where the money you make is based primarily on the number of distributors you recruit and your sales to them, rather than on your sales to people outside the plan who intend to use the products."[33] and states that research is your best tool and gives eight steps to follow:
    1. Find — and study — the company’s track record.
    2. Learn about the product
    3. Ask questions
    4. Understand any restrictions
    5. Talk to other distributors (beware shills)
    6. Consider using a friend or adviser as a neutral sounding board or for a gut check.
    7. Take your time.
    8. Think about whether this plan suits your talents and goals[33]
    Some believe MLMs in general are nothing more than legalized pyramid schemes.[21][22][23][24]

    [edit] Connection to franchise fraud

    Franchise fraud (or 'franchise churning') is defined by the U.S. Federal Bureau of Investigation as a pyramid scheme. The FBI website states:
    pyramid schemes :—also referred to as franchise fraud or chain referral schemes—are marketing and investment frauds in which an individual is offered a distributorship or franchise to market a particular product. The real profit is earned, not by the sale of the product, but by the sale of new distributorships. Emphasis on selling franchises rather than the product eventually leads to a point where the supply of potential investors is exhausted and the pyramid collapses.[34]
    One of Pearlasia Gamboa’s (president of the micronation of Melchizedek) franchise fraud schemes was described by the Italian newspaper La Repubblica as “one of the most diabolical international scams ever devised in recent years.”[35]

    [edit] Notable recent cases

    [edit] Internet

    In 2003, the United States Federal Trade Commission (FTC) disclosed what it called an internet-based "pyramid scam." Its complaint states that customers would pay a registration fee to join a program that called itself an "internet mall" and purchase a package of goods and services such as internet mail, and that the company offered "significant commissions" to consumers who purchased and resold the package. The FTC alleged that the company's program was instead and in reality a pyramid scheme that did not disclose that most consumers' money would be kept, and that it gave affiliates material that allowed them to scam others.[36]
    WinCapita was a scheme run by Finnish criminals that involved about €100 million.

    [edit] Others

    The 1997 rebellion in Albania was partially motivated by the collapse of pyramid schemes.
    In early 2006, Ireland was hit by a wave of schemes with major activity in Cork and Galway. Participants were asked to contribute €20,000 each to a "Liberty" scheme which followed the classic eight-ball model. Payments were made in Munich, Germany to skirt Irish tax laws concerning gifts. Spin-off schemes called "Speedball" and "People in Profit" prompted a number of violent incidents and calls were made by politicians to tighten existing legislation.[37] Ireland has launched a website to better educate consumers to pyramid schemes and other scams.[38]
    On 12 November 2008, riots broke out in the municipalities of Pasto, Tumaco, Popayan and Santander de Quilichao, Colombia after the collapse of several pyramid schemes. Thousands of victims had invested their money in pyramids that promised them extraordinary interest rates. The lack of regulation laws allowed those pyramids to grow excessively during several years. Finally, after the riots, the Colombian government was forced to declare the country in economical emergency to seize and stop those schemes. Several of the pyramid's managers were arrested, and these are being prosecuted for the crime of "illegal massive money reception."[39]
    The Kyiv Post reported on 26 November 2008 that American citizen Robert Fletcher (Robert T. Fletcher III; aka "Rob") was arrested by the SBU (Ukraine State Police) after being accused by Ukrainian investors of running a Ponzi scheme and associated pyramid scam netting US$20 million. (The Kiev Post also reports that some estimates are as high as US$150M.)
    Throughout 2010 and 2011 a number of authorities around the world including the Australian Competition and Consumer Commission, the Bank of Namibia and the Central Bank of Lesotho have declared TVI Express to be a pyramid scheme. TVI Express, operated by Tarun Trikha from India has apparently recruited hundreds of thousands of "investors", very few of whom, it is reported, have recouped any of their investmen

    Fast And Easy Way To Earn

    People often try to think of different ways to get money fast and easy. Well, if you are among these people is the role of the Internet you can have a great start.

    Make easy money using the Internet may seem quite an attractive business for most people. The fact is that it's true if you put a little effort and lots of patience.
    Facts:

    You should remember that you can never use a shortcut to make money if it means he must soon or later. You have to take a long term patient to achieve your goal. If money makes the use of online procedures is that simple, then you will not find much room in the net to promote your site.

    The key to making easy money from the net to work harder. Consider this point in your mind as long as you do business online, even when you've reached your goal.

    Many people become stranded in terms of making money online easy, because they expect that the method is fairly simple. But they give up all this when they realize they have to sweat a little more difficult. For those still clinging on will certainly get their rewards. Online business depends on the time and patience. It's worth waiting for rewards.

    What you have to do?

    The key of course is hard work, but also research and homework well. The more you put your time to research that will save you a lot of knowledge about the online market. See that one is still unknown and untapped. You have to focus here.

    You will also research on supply and demand. Try to determine which applications are made in large numbers and where you find supplies.

    The best way you can take to make money online is easy by following the steps of successful Internet entrepreneurs. Trying to reinvent the cycle may cost you more than you earn. Create your own website is a must because it will be the base where you can host your company. It could cost you a few dollars, but the return you get is enormous.

    You must also provide a valuable and relevant content that will attract hungry customers. Content can be vital to your website to attract people. This will generate high traffic on your site instantly and you may get more benefits if they visit your site.

    If you can set up an eBay Store because it will prove to be as profitable as you establish an online store. The fact is that eBay has earned an excellent starting point and important clients, and there will be no need to deal with any inventory. They treat all your work, including transactions.

    The online market is becoming increasingly large as the seconds pass. Starting an online business to make money quickly has never been so easy.

    Money management

    deals with the question of how much risk a decision maker should take in situations where uncertainty is present. More precisely the percentage or the part of the decision maker's wealth should be put into risk in order to maximize the decision maker's utility function.

    Money management also evaluates the reward of a trade and resolves the most functional use of investment money. It declares the number of shares to purchase and how much money to place at risk. It is the distinction between an outstanding trading performance and pitiful performance. It will make the difference between making money and going broke.

    Money management gives practical advice among others for gambling—wagering money or something of material value on an event with an uncertain outcome with the primary intent of winning additional money or material goods and for stock trading—buying or selling stock shares.

    Money management is also associated with risk management. It is considered definitely crucial to successful trading on an ongoing basis. Many traders look at it as the single most vital element of trading. Indeed, deficient money management is one major cause of bankruptcy among unseasoned traders. There is little doubt that adopting proper money management will lead to more traders being able to attain success, or to avoid devastating failures.

    Some traders wrongly perceive that they are managing their money by having money management stops. These stops enable the trader to get out of an event where they lost an inevitable amount of money. However, such kind of stop does not announce the quantity, so it really has nothing to do with money management.

    Controlling risk by proclaiming the amount of loss if you are stopped out is not identical to directing risk through a money management model that determines the extent of your problem.

    There are many money management strategies that are available. Some are probably more suited to your style of trading than others.

    Having said that, there exist two basic systems for money management that we need to be take interest in. These systems were derived from the gambling theory.

    The first trading system is the Antimartingale System. It denotes an increase in risk every time one wins and marks a decrease in risk when losing. This system is found to be functional and is often used as basis for most of the money management systems.

    The second is the Martingale System. This strategy aggrandizes money at risk during a losing streak. Following a loss, the value of money increments on the next trade. The assumption indicates that one eventually wins after a series of losses.

    One of the focuses and main ideas behind money management is to safeguard and maintain a healthy capital so as to enable a person to live to trade another day. Before ever undertaking a trade, the first thing you should consider is the amount of money being risked. The next pondering would involve the extent of loss that one is able to accept and correct. One of the most common mistakes new day traders make is that of putting all of their capital on one or two stocks.

    Money-Making Articles and Books

    Apply "Factor IG" to Become a Winner!
    Most people trying to make money on the Internet fail because of "Factor IG" - the Missing Ingredient! If you want to become successful as soon as possible, you're well advised to apply "Factor IG" immediately. Many people waste a great deal of time and money... and end up frustrated because they lost their time and money. About 95%+ of your success depends on "Factor IG." If you don't apply "Factor IG," the chances are overwhelming that you'll fail. If you do apply "Factor IG," your chances of success are virtually guaranteed!
    Basic Money Skills
    There are thousands of self-improvement, success, and money-making books. Many of the authors have attempted to put together some "integrated formulation" from their own experiences and from all the other sources available to them. Unfortunately, most of them -- if not all of them without exception -- are somewhat incomplete and sometimes even hopelessly misguided in some respects. I hope my attempt at formulating some money skills will become more complete than most.
    Advanced Money Skills
    More money skills to guide you to even greater success in money making.
    The Competitive Edge -- by Fran Tarkenton (legendary NFL quarterback & business consultant) and Joseph H. Boyett
    Great series of articles on starting your own business, motivation, training, and related issues.
    The Economic Means to Freedom
    The importance of financial freedom and independence and some practical steps to achieve an economic status such that you don't have to work for money. By financial freedom and independence I mean having organized your life and affairs so you don't have to work for money. If you're interested in such financial freedom, then this article may be well worth reading.
    Failure Scripts and Where The Rocks Are
    Many people (maybe 90% or more) will make relatively little progress with their lives generally unless they learn to overcome the limitations of certain basic unconscious scripts most people suffer from.
    General Financial Independence FAQ
    Questions asked to Frederick Mann about general financial independence.
    How to Motivate People - The Team Strategy for Success -- by Fran Tarkenton (legendary NFL quarterback & business consultant)
    Great series of articles on motivation.
    How to Overcome Economic Correctness
    "Economic correctness" may keep you stuck in a dead-end job -- poor or relatively poor for the rest of your life. "Economic correctness" may prevent you from losing money in a myriad of ripoffs and scams. But "economic correctness" may also prevent you from gaining the riches every man, woman, and child on earth deserves.
    How to Wake Up Your Desire to Learn, Grow & Succeed
    Some people don't realize that in order to succeed, it's necessary for them to learn and grow a great deal. Some may deceive themselves that they're open to learning and growing, when they're really not. If you haven't been as successful as you'd like to be at making money on the Internet, this may be a good place to start.
    The Importance of Anchor Programs
    The idea of an anchor program is that it's suitable to form the foundation of your financial independence. It is sufficiently stable and can become profitable enough, over a reasonable period, so you can live off the income it produces and use it as a springboard for much higher future earnings. It's also something you can fall back and rely on if other ventures fail.
    Internet Marketing for Beginners & Professionals
    The big breakthrough in this article is the delineation of "levels of Internet marketing skills," ranging from 1. IMB - Internet Marketing Baby to 6. IMG - Internet Marketing Guru. Much of the power of this articles lies in that it gives you a means to identify where you are. You can then use it to draw a "roadmap" of how you need to advance in order to become successful.
    Liberty Money Machines
    About 15 years ago I bought a little book by Don Lancaster called The Incredible Secret Money Machine. It made a lasting impression on me and inspired a quest for me to create my own "money machines."
    Marketing Case Studies
    Anyone is welcome to submit the details of their current Internet marketing methods to Frederick Mann to be included in this article. This could be a great way to improve your Internet marketing.
    Marketing Resources & Free Submitters
    Some great marketing resources.
    The Millionaire Report Series
    "When I started writing this series of reports, I was relatively poor and my business small. By the time I completed the eighth report, I was relatively wealthy and my business was much larger and growing rapidly!" -- Frederick Mann
    One of the Most Powerful Marketing Formula on the Internet
    According to marketing guru A.M.: "In my opinion, BB7M is the best FREE site on the Internet today. And believe me... after three years of marketing on the Internet, surfing 10-12 hours a day for about two years, spending over $250,000 designing and programming my own sites, and consulting with several companies how to market on the Internet... MY OPINION COUNTS."
    Playing To Win -- by Fran Tarkenton (legendary NFL quarterback & business consultant)
    Tark's rules for "winning the game"; various myths exposed.
    Scarcity to Abundance; Poverty to Prosperity; Limited to Unlimited Thinking
    Apply this report to drastically improve your thinking and create an abundance and prosperity mindset.
    Science of Getting Rich
    Wealth begins in the mind. When you think in certain deliberate ways, that will cause you to act in more effective ways. You will produce more of the results you desire. The key is in how you think. If you haven't yet opened the door to your riches, this is a good place to start!
    Understanding Money-Making Programs
    After over seven years of extensive experience with hundreds of money-making programs (and examining several thousand more), I've learned quite a bit about what tends to work and what doesn't.
    Upgrade Your Brain & Life!
    What is your most valuable asset? Could it be the gray matter in your head, your brain with all its abilities and all the knowledge in it? What, more than anything else, determines your success, your health, your wealth, your happiness? Whatever benefits you're now providing, you can upgrade your brain and improve and increase the benefits you provide. One of the greatest benefits you can provide to people is whatever results in them upgrading their brains.
    What Qualifies You to Recommend These Program? & What Criteria do You Use to Select Your Programs?
    A brief biography of Frederick Mann and 14 points of program selection criteria.
    Zero-Risk Money-Making & No-Cost Marketing
    Is it possible to start with zero money and make a fortune working on the Internet? In this article I aim to provide some guidelines on how anyone with a computer and access to the Internet can in fact make money without having to invest or risk any of his or her own money.

    Saturday 24 September 2011

    How to make money writing online articles


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