You Can't Cheat an Honest Man - James Walsh [23]
In October 1989, Lampert was named in a 15-count criminal fraud indictment. Lampert faced a maximum of 75 years in prison and a fine of $1.2 million. The indictment ended a four-year investigation by the U.S. Attorney’s Office, the California Attorney General’s Office and the Postal Inspection Service. “They were rolling over money from new investors to old investors, creating a classic Ponzi scheme,” said Michael Baum, a San Francisco postal inspector.
In March 1991, the case went to trial. Lampert’s one remaning attorney, Deputy Federal Public Defender Robert Nelson, argued that his client had perpetrated no fraud but had worked for years for low pay to improve his cutting-edge technology. “This case is about a solar pioneer who tried to live his dream of making clean energy from resources of the sun,” Nelson said.
He said Lampert was on the brink of success when the IRS, upset that the investments had become popular as legal tax shelters, “harassed and blacklisted the company,” leading to its demise.
The argument didn’t work. Lampert was convicted and sentenced to eight years in prison.
CHAPTER 4
Chapter 4: Paying First Class, Traveling Steerage
The travel industry might not seem like an obvious place for Ponzi schemes to flourish—but it is. Travel has all the seductive trappings any seasoned Ponzi scam artist needs to operate:
• Passion. People are passionate about travel; especially, vacation travel. The Ponzi perp is banking on the fact that passion makes people act without thinking.
• Ease. The travel industry is largely unregulated; therefore, it is easy to get away with otherwise questionable activities.
• Privacy. When travel is a personal expense, many people like to keep its financial details to themselves.
• Enthusiasm. People who like to travel usually can be counted on to do it often; thus, it’s a continual source of revenue.
Personal travel has become a ruthlessly price-driven commodity. The deregulation of the airlines, which began in the early 1980s, led the way on this count. Low-cost carriers like Southwest Airlines and ValueJet (and, in another area, Carnival Cruises) keep prices down.
On the other hand, business travel is a market with fat margins, big mark-ups and, as a result, all kinds of special deals. There are advantages to being an industry insider—just ask the travel coordinator for any large company. He or she is usually laden with promotional perks and freebies.
Ponzi perps try to take advantage of the fundamental differences that exist between personal travel and business travel. The smartest perps choose between investment-driven Ponzi schemes and sales-driven pyramid operations as circumstances dictate. Both work in the travel business. And sometimes the scheme combines both elements.
Travel Agent Card Mills
For years, airlines, hotel chains, car rental companies and other companies in the industry have offered professional travel agents promotional discounts and free upgrades in order to earn recommendations to business travel customers. These perks are one of the reasons that people who like to travel become travel agents.
The pyramid perps are drawn by a critical market imbalance created by the perks. Personal travelers accustomed to the low prices created by no-frills carriers see the perks available to travel agents as their best chance of getting even deeper discounts...or regaining some of the nicer treatment that commodity travel has eliminated.
The simplest way to get around the market imbalance is to become a travel agent. But becoming a professional travel agent has traditionally taken years of training, accreditation by groups like the American Society of Travel Agents (ASTA) or International Airlines Travel Agent Network (IATAN), compliance with licensing and registration requirements and obtaining bonding and comprehensive insurance.
That’s a lot of work for a free upgrade on a Newark-to-Chicago flight.
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