Should I report what I suspect is a ponzi scheme being pitched?

January 26, 2007 1:38 PM

What should I do about overhearing what I think was the pitch for a ponzi scheme?

So I spend my fridays from about 11 to 2 in the starbucks a few blocks from my apartment. For the last three weeks the same two (or in one case three) guys in nice suits have been pitching different groups of five to ten people trying to get them to go into some kind of business with them. Because there isn't a whole lot of seating room I've been next to them each time and overheard a few sections of the pitch and it sounds like they are selling distributorships for some kind of telecom device/service which I can't understand. All of the technical talk I've heard them give is total bullshit (I have two CS degrees so I can tell when they make no sense) and the stories they tell about their genius backers are too good to possibly be true. While it's possible that these guys are just stupid businessmen their scamming/sales talk is too polished, and the fact that I saw one of them sell a "Gold Plan" to one of the visitors for $2300 pretty much cements the whole thing in my mind. So what do I do? I really don't want to piss someone who is running such a lucrative scam off (I foresee it ending badly for me) , and I don't have any real evidence anyway. On the other hand the stories I overheard from their customer/victims make me want to help them out, since they seem ill able to lose the money they are "investing". Should I try to chase down whoever in the city/state police would be investigating this kind of thing? Should I do so anonymously? I live in NYC if anyone has any hints on who to get in touch with.

posted by frieze to Human Relations (24 answers total)

I would contact the manager of the place first and tell them there are some nefarious people trying to con people in their establishment and let them take action.
posted by parmanparman at 1:47 PM on January 26, 2007

it's probably a MLM which is (unfortunately) completely legal. You could always print out copies of What's Wrong With Multi-Level Marketing by Dean Van Druff and hand 'em out.
posted by noloveforned at 1:48 PM on January 26, 2007

Certain long distance companies used to sell in this way (and may still). I used to know a guy who sold it along with cell phone service (which wasn't MLM).
posted by wierdo at 1:52 PM on January 26, 2007

Response by poster: b1tr0t: two problems.

1) I really don't want to be connected to these guys at all. If they are running a ponzi scheme they are committing a crime, and people can do funny things when someone is in a position to get them incarcerated. Additionally, I just don't want to interact with them. Just sitting next to them at starbucks makes me want to go home and take a shower.
2) I have shit to do. I have a job and I have a social life. I really don't have the time to be playing "The Sting" with them.
posted by frieze at 2:11 PM on January 26, 2007

If you can find out the name of the business (or better yet, get one of their business cards), try contacting the Better Business Bureau.
posted by russilwvong at 2:20 PM on January 26, 2007

From what you've described, it doesn't sound like MLM or a Ponzi scheme so much as a simple scam. However, they may be getting people to sign contracts that are legally valid by being careful with the language--people are probably getting something for their $2300, even if the pitchmen are misrepresenting it verbally (the only way to prove that would be to record them, and anyone who was savvy/suspicious enough to do that wouldn't be attending such a pitch in the first place).

One thing these people sometimes do is, instead of taking your money directly, they open a credit line in your name with a legitimate bank and get the money from there (so you can pay it off with "low monthly payments"). So unless you contest it within a short window of time after signing, you're on the hook with the bank and really have no recourse as far as contesting or canceling it. But the bank's involvement makes it seem more legitimate.
posted by staggernation at 2:26 PM on January 26, 2007

Answer A: Don't invest in it. Don't let your friends and loved ones invest in it. Otherwise, mind your own business.

Answer B: Contact the FBI. Tell them your story. Elaborate if they ask. Cooperate fully.
posted by Dave Faris at 2:28 PM on January 26, 2007

These guys are part of a long and dishonorable tradition. The South Sea Bubble, which collapsed in 1720 leaving many ruined investors in its wake, came out of coffeehouses.

They need to end up in the 'fourth place'-- prison. Please go to the state Attorney General's office.
posted by jamjam at 2:31 PM on January 26, 2007

"fool and his money are easily parted".

I agree with Dave Faris, keep your friends and yourself out of the scheme and let people learn from their own mistakes (or profit immensely by getting in on the ground floor of this ground-breaking new way to earn money while they sleep!)

However, if I didn't agree with Dave I would suggest you buy a multicolored costume and becmoe a super hero. You can parade around the city disrupting MLM meetings and Ponzi schemes on a regular basis. You need to come up with a memorable saying like "I hope they cover THIS in your gold plan " or "You have a license to sell, and I have a license to KICK YOUR ASS!". Oh! Or "Power Point charts be Damned!"

That was fun.
posted by ZackTM at 2:35 PM on January 26, 2007

You could always 'accidentally' spill some coffee on/near them during their pitch.
posted by Merlyn at 2:37 PM on January 26, 2007

Let me explain why this doesn't necessarily strike me as MLM.

1) Large lump sum. MLM generally involves buying repeated quantities of relatively small items (household goods, vitamins, exotic juices).

2) The products in MLM don't tend to be as sketchy as what you've described (even if the health claims made for some of the juice/vitamin-type products are wildly exaggerated). The scam is not in the products but in the structure of the business.

3) In MLM you most often find couples, or sometimes individuals, who are pitching to their friends, family, and acquaintances. 3 guys in suits with a very polished presentation doesn't really fit the profile.

4) Regular sessions at Starbucks. With MLM you would expect people to be pitched individually, or maybe a small group in a couple's home. This sounds like maybe something that's been advertised with flyers.
posted by staggernation at 2:44 PM on January 26, 2007

Stand behind them while they're 'pitching' holding a sign that says:

IT'S A SCAM
RUN AWAY NOW
posted by koeselitz at 2:46 PM on January 26, 2007 [4 favorites]

Some years ago, I sat quite near a pair of spam salesmen in a restaurant who were trying to get some schlub to sign up for their "targeted e-mail marketing," etc.

I, for better or for worse, lost it a little bit, listening to so much bullshit, and tried to explain why it was so infuriating to the never-been-on-line schlub.

At the end of the meal, he declined, citing my reaction quite a bit. And the stuff I'd brought up about how the few people who would genuinely want his ads e-mailed to them would reach him through a web site, and...

Anyway. It wouldn't take much involvement to explain just what parts of the technical talk are bullshit, and why they are bullshit, to a schlub or two. If you were lucky, one schlub would listen well enough, and get mad enough about having almost been taken, to go after them for everybody else.
posted by kmennie at 2:47 PM on January 26, 2007

Seconding contacting your state's AGs office. Perhaps surreptitiously recording a session to get them started. Many state AGs are lawyers just looking for a big case to get into the governor's office.
posted by kc0dxh at 3:01 PM on January 26, 2007

You might want to let the Starbucks manager know; he might not be too fond of a couple of scammers using his store as their place of business.
posted by TedW at 3:03 PM on January 26, 2007 [1 favorite]

3 guys in suits with a very polished presentation doesn't really fit the profile.

Actually, MLM comes in all kinds of flavors. Mom 'n Pop is most common, yes, but I've seen full-on, hotel conference room presentations for Amway.

Many doctors and lawyers looks to make some extra scratch with zero time requirements will set up shell companies that are re-sellers of Amway. The salesmen in suits aren't paid from the Amway money, but on a commission paid by the doctor/lawyer when THEY collect the Amway money.

So, it's entirely possible that this is perfectly legit MLM. Just because you don't like it doesn't make it evil.
posted by frogan at 3:04 PM on January 26, 2007

Most establishments have signs stating "no soliciting." Quietly tell the manager that dudes are on a sales pitch. Or leave a note in the tip jar, if you want to be more anonymous, though you have to word it carefully if you want anyone to take it seriously.
posted by desuetude at 3:10 PM on January 26, 2007

Ameriprise Advisor recruitment = MLM.
posted by whimsicalnymph at 4:32 PM on January 26, 2007

From what you describe it sounds like a scam. If you local cops have a bunko squad offer to buy an officer a cup of coffee and a Scone.
posted by Megafly at 5:45 PM on January 26, 2007

Next time you overhear their pitch, act like they've piqued your interest. Then start asking very technical questions about their product. Like, details - how does it work questions.
If they're scammers, they either won't know the answers and look like evasive jackasses in front of their fish, or they'll make up some bullshit. Either way, you call them on it, right there in the Starbucks. May not stop them forever, but you won't see them in that shop again.
posted by ctmf at 5:50 PM on January 26, 2007

It sounds like a plain scam. You can do three things:

1) Nothing. Enjoy life.

2) Get the law involved. Call your local police (Not 911, the non emergency number) and tell them. They'll know what to do, or not do.

3) Anything else. If your goal is to get them away from your favorite Starbucks, tell the manager. Starbucks is generally pretty open to people holding business meetings in the place, but might not like to know there's a scam going on in the back.

However if you goal is to see these guys not scam anyone, do not do this. They'll just go to the next Starbucks.
posted by Ookseer at 8:13 PM on January 26, 2007

Sweeps Week is just around the corner. Call the "I-Team" at your local TV station. They'll eat this stuff up with a spoon, and the ensuing story will scare future potential victims away.
posted by Kibbutz at 9:18 PM on January 26, 2007 [1 favorite]

You have no evidence. You have overheard conversation. You have no relationship with them and you dont want to get involved.

Well, dont do anything. I dont see how its your business really and even if you are correct, theres no shortage of people willing to give 2000 dollars to a fast talker in a starbucks. Even if you were to do the bare minimum like contacting the FTC then you will need to spend time filling out the forms and they will probably contact you. By the time this happens Im sure they will no longer be there anyway.

Even if you decide to do something dramatic the best you will do is maybe scare them off to another starbucks.
posted by damn dirty ape at 9:44 PM on January 26, 2007

I'm pretty sure the absolute last thing that Starbucks wants is people getting scammed in their stores. You need to talk to the manager of the Starbucks and explain to him that there are conartists operating in his store and that Starbucks may be held liable for any ill gotten gains since they're providing an operating environment and this might be perceived as an endorsement. Don't worry if this is legally sound or not just tell the manager he needs to take care of it. Also contact Starbucks corporate headquarters via email or letter and register your complaint in writing.

If that doesn't work you should go ahead and confront the guys and tell them they need to take their shit elsewhere or you'll call the cops. Don't worry so much about your own safety; successful scam artists aren't in the business of disappearing college students they're in the business of scamming the unfortunate.

And christ don't listen to the people telling you to do nothing. You're 100% right to be offended by the presence of scammers preying on the less fortunate. Now do the right thing and take the next step.
posted by nixerman at 2:43 PM on January 27, 2007