The Ponzi-like job
A Ponzi scheme is a form of fraud that lures people into putting money into a business or company with the promise of getting great profit with low risk, then will use the money from new investors to pay previous investors.
For a Ponzi scheme to work, there should be a person with highly convincing strategies and a very charming or at least reassuring personality in order to make others feel trust and engage with the investment idea.
Where am I going with this? Well, it’s story time!
A friend of mine, who’s very talented and whom we will call Elaine, was contacted by an acquaintance of hers a few months ago (whom we will call George). George was not her friend or someone very close, but also she had no reason to doubt him. George contacted Elaine telling her that since she was an expert in the computer intelligence field, she would be the perfect candidate to join a new company George and another person (who we will call Kramer) were starting. George told her that now they didn’t have a lot of money since it was a very new idea and a very new company, but Elaine would have the chance to join them from the beginning and have all these great benefits.
Elaine is as I said, a very smart and talented person, but also she doesn’t distrust people enough in my opinion. So, Elaine met Kramer and George together, still a bit skeptical of things, but when meeting Kramer in person, Elaine got totally hooked. Kramer turned out to be a totally reassuring and even charming person and spoke a lot about why they wanted to do this project and how this could change the lives of so many people. When I spoke to Elaine, she was totally excited, and even I felt excited about her, because it seemed she had found a project she really liked in a place with an actual mission and all.
Elaine was a full-time employee in another company when meeting George and Kramer for the project, Kramer made a great point that Elaine should not quit her job yet, since they were in the stage where they needed to get funding first. However, Elaine slowly started to take more responsibilities within the company, and brought her ideas and expertise to the project, without asking anything in return since both Kramer and George claimed there was no money to pay anyone.
You should be thinking, at this point in the story, nothing seems really wrong, but here’s where the Ponzi-like scheme starts.
Shortly after Elaine was involved in all of this, and also after Kramer had already developed a more personal exchange with her through meetings, calls or even eating dinner together; George got into a fight with Kramer and decided to leave the company (George also had a full-time job somewhere else, so she was only leaving this project that involved Kramer). From this situation, Elaine got some private messages from George, warning her that Kramer was not a good person (let’s say) and that he had abused the trust of George workwise. Elaine, after also seeing that George wasn’t the most stable person, and helped by the relationship she had already with Kramer, decided to give him the benefit of the doubt, besides, Kramer didn’t seem to be such a bad person (he was very friendly).
Apparently, a couple of weeks after that, Kramer got a letter from George’s lawyer, asking to get paid for the work he had done during the last months. He told Elaine, that this was unfair and that George was only doing this to take revenge and destroy the company, especially now that he knew there wasn’t any money, how would Kramer pay for the lawyer to help him save the company? Kramer played a very good victim in this part. Well, my good friend, with the kindness of her heart offered to loan Kramer some money to pay for the lawyer fees and save the company, after all, Kramer made it seem until now, that a part of the company belongs (or will belong) to Elaine.
During that time, whenever I spoke to Elaine, she was very convinced of the projects, and investing herself in them, she was overworking (she was working 12 hours per day combined with her full-time job), even when sick or on holidays. Yet, whenever I asked about the rights she had in the company, she wouldn’t be sure, she would tell me that Kramer was a very difficult person to talk with, and would always excuse him by saying things like “he doesn’t mean to be like that, he has suffered so much” or “it’s a trauma response to his past”. Kramer would always take a confrontational and even defensive position, whenever Elaine would talk about her role in the company and even the rights she would get.
Meanwhile, my friend would be attending all sorts of meetings, writing the project’s specs, developing the actual products, and even seeking funding with investors, without having anything in writing, but solely the word of Kramer as a promise.
This went on for like
One day, Elaine called me and she was on the border of a breakdown, she was struggling so much with her health, she would be having constant panic attacks and feeling super stressed (and I’m an expert on these kinds of ailments). When I asked about how things with Kramer were going, she broke into tears and told me that now every time she would bring up the topic of putting things in writing, he would avoid it, and instead, he would have an aggressive attitude towards her. She said that Kramer was even refusing to recognize her contributions, and making “gymnastics” when doing the maths of the value of her work.
The result of this story: Elaine got a “termination letter” for a contract that she never had, with threatening messages, stating that she had caused insanely pricey damages to the company by withdrawing herself, and removing the work she did for free, and that she could even get sued by that, how she had broke some form of NDA, and how all the work she did for free was supposedly company’s property (because we apparently still live in slavery times). Also, she never got the money she loaned to Kramer, since he claimed that he would only pay her when the company secured something like 10 times the debt (right! because that’s how debts work, or?).
I could only recommend Elaine to consult with a lawyer and wish that at least she could recover the money she paid to him. But it all made me think, that maybe now Kramer will need to find a new person, who can give him some money in order to pay what he owes to Elaine. Hence, bringing someone to take money from and pay the former, until the new person also goes and he needs someone else to pay, creating a cycle. This sounds totally to a Ponzi-like scheme.
The moral of the story: never give money to anyone, who hasn’t put in writing the terms and conditions, and never never never work for free.