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The same thing happens in the financial world, when victims don’t believe they were scammed, and/or attack the authorities for stopping the scam. The victims are also especially vulnerable to reload scams (i.e. another similar Ponzi scheme). One prime example was the Ad Surf Daily Ponzi. 

Ad Surf Daily Ponzi started in 2006 as a clone of yet another Ponzi scheme called 12DailyPro. Ad Surf Daily was closed by the US Secret Service in August 2008. The Ad Surf Daily ponzi can be best described as “you put money in, and you’ll get back a small percentage (between 0.5 and 1%) every day… forever!” The fiction was you buy “ad units” that will be watched by other members, and other members do the same. Somehow, this generates a “profit” of which 50 to 60% will be distributed to all the people, and the profit can be used to buy even MORE ad units (i.e. “rollover”). When it was closed by the authorities in 2008 it had consumed 110 million dollars from thousands of victims, and having earned endorsement from multiple lawyers and consultants, some of whom testified in court that they do NOT see a Ponzi scheme in Ad Surf Daily.

Some of the more bizarre Ad Surf Daily victims are the duo of Todd Disner and Dwight Owen Schweitzer. Disner was supposedly co-founder of Quiznos sandwich chain, while Schweitzer was a disbarred lawyer. It was unclear what initiated their contact with a Ponzi scheme, but after Ad Surf Daily was shut down in 2008 the duo formed “ASD Justice”, then proceed to file multiple “motion to dismiss”, then when that was denied, multiple appeals. Their latest defeat came in 2012. They sued everybody, from trustee to court officers to police, using some of the most bizarre logic possible. Here’s a website which collected all their court motions. (Thanks to Don at ASDUpdates.com for maintaining this list): https://sites.google.com/a/asdupdates.com/files-website/asd-justice-case

With that sort of mentality, that a Ponzi scheme is a legal and profitable enterprise that needs to be protected FROM the authorities, it is no wonder that Disner and Schweitzer would soon get involved in yet ANOTHER Ponzi scheme. Those who study scams call this a “reload”. Why? The scammer shoots the victim, who does NOT run away. That gives time for scammer to reload the weapon, and shoot the victim again.

And indeed, Disner and Schweitzer found themselves fronting yet ANOTHER Ponzi scheme, this time Zeek Rewards, which ran from 2010 to August 2012, when it was closed by the SEC. Again, the mechanism is eerily similar: you put in money (buy bids for giveaway), then every day you get back a small percentage (from 0.7 to 1.8%). This one had some variations, like your “VIP points” expire after X days, and it was supposedly to promote a “penny auction”, but the overall mechanism was essentially the same.

Disner and Schweitzer may have provided support to a third individual, Robert Craddock, who then went on to claim to have hired various big name law firms to sue the SEC and reopen Zeek Rewards (just like Disner and Schweitzer did for ASD), but never delivered. When interviewed by WRAL news in Feb 2013, neither Disner nor Craddock have any comment on the advice of their attorneys. (NC company accused of swindling customers, yet no charges filed)

(Craddock had filed a bogus “takedown” order that resulted in the Hubpages article above going offline for 2 weeks prior to the SEC shutdown, but that’s another story for another time)

It is also worth noting that both Craddock and Disner/Schweitzer solicited donations from victims of the Ponzi to “defend” the Ponzi from the government, and to recover victim’s money, and both claim to have gathered thousands of dollars in the “defense fund”.

The trustee in the ASD case was able to return most of the money that all victims who filed a claim got 100% of their money back. However, Zeek Rewards receiver is reporting that out of the 700+ million involved in Zeek Ponzi (initially reported as 600 million) he was only able to recover about 300 or so million, and will have to initiate many clawback lawsuits (similar to the one Irving Picard did against the “winners” in the Madoff Ponzi) to get back the rest already paid out to various “winners”, and it is likely those winners had already moved the money into yet some OTHER Ponzi schemes they are now pushing on various Internet forum through straw shills and net puppets.

Victims of Ponzi schemes often react to the cognitive dissonance that whatever they had been promoting / participating is a scam, that they often end up sympathizing with the scammer. In fact statistics puts the chances at roughly 50% that the victims will not recover their assets, but instead, walk away, negotiate with the scammer, or actually join the scammer in fighting the government and the other victims. Thus, it can be argued that a significant number of them do NOT know what they’re doing. (Cognitive dissonance theory and the recovery of stolen assets)

Google searches today still showed various comments left by Zeek Rewards sympathizers, esp. around late August and early September 2012, after Zeek was closed, that many of them suffered symptoms almost identical to the battered spouse syndrome. Many of them claimed that Zeek was just misunderstood, and Paul Burks (head of Zeek) wouldn’t hurt a fly, no way he would operate a scam, and so on and so forth. Others let their imagination run wild, like “Zeek will reopen soon in Europe” or “SEC made a mistake, but is too embarrassed to admit it, so it’s a conspiracy to suppress the truth.”

They need to hear that Paul Burks, who’s also a magician, really think about the victims. Paul Burks, former head of Zeek, when asked by a reporter if he had something to say to his victims… replied

“I never told anyone to invest more money than they could afford,” Burks snapped. “I didn’t tell them to do that. Never.”
He said if they lost money, “it’s their fault. Not mine. Don’t blame me.” (Authorities: $600M scheme incubated in NC town)

In other words, it’s the victim’s fault. They WANT to be cheated, so they should have only put in money they expect to lose. That is known as the “slut defense” in rape trials, and that doesn’t fly at all.

Yet “the victim knew what they were doing” was a common defense for narcissistic scammers… the victims are BEGGING to be cheated. Back in January 2012, Dennis Bolze got news that the 3-judge panel denied his appeal that his jail sentence was too severe. Why did he believe his 22-year sentence was too severe? The lower court ruled that he deserved a two-level “vulnerable victim” sentence enhancement because his victims where primarily seniors. Bolze argued that because the seniors put in their money willingly, and “they know what they’re doing”, they are not really “victims”, but someone who took a risk and lost. The court denied the motion.

All in all, cognitive dissonance often result in what third-party observers can only call “bizarre” behavior. However, such behavior, when involving finances, can result in serious and immediate consequences. Many victims of Zeek mortgaged their house or withdrawn retirement / college savings to fund the scam. Now they will be lucky to get back 60%, and will have to wait years to do so, not to mention having their dreams demolished, and hear or see “I told you so” even when none was actually said. It is a dangerous condition that may result in them being further victimized by reload scams when they are especially vulnerable.

The post Cognitive Dissonance, Ponzi Schemes, and Reload Scams by Kasey Chang first appeared on Skeptics On The .Net - The directory for all things skeptical online.

The service offered by Skeptical Kitty is crowdfunding for the promotion of science and the skeptical movement.  Submit an idea and allow the community to help.

Skeptical Kitty is for you – to fund projects, products, events or anything that will promote the use of the scientific method in everyday life.

Many people are already doing great things. Skeptical Kitty hopes to help fund those great things, to help them reach further and beyond.

Critical thinking is important to us. The skeptical movement is gaining ground and exposing more and more woo-woo for what it is.

Skeptical Kitty is a not-for-profit based in Australia. Successful campaigns contribute a 5% fee from funds collected, making Skeptical Kitty possible.

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Finding out what that would be wasn’t easy. I stumbled on editing Wikipedia when I attended a lecture that Tim Farley gave on a JREF cruise. Even then I didn’t jump up and announce to the world “I’ve found my passion.” It started out with me editing by myself (I’m completely self-taught) and then others started to gather around and ask if they could help me out.

Guerrilla Skepticism on Wikipedia is the project I’m talking about, maybe you have heard about us on a podcast, blog or even at a conference, we tend to get around. Here is our mission statement…

The mission of the Guerrilla Skepticism editing team is to improve skeptical content on Wikipedia. We do this by providing noteworthy citations, and removing unsourced claims from paranormal pages. It is also our mission to improve the pages of our skeptic spokespeople. Why? Because evidence is cool. We train – We mentor – Join us.

One question I get a lot is how come you call yourselves Guerrilla Skeptics when you follow all the rules of Wikipedia and do not advocate vandalism? Well the reason is because the title, The Mainstream, Responsible Wikipedia Editorial Project isn’t going to get a lot of attention. And we really need attention.

I’m going to give one example of a page that was rescued from stub status. This isn’t a popular page that gets a thousands of hits each month. In fact it receives under 200 views each month. This is the Robert Ingersoll Museum page. I was working on several projects with Tom Flynn when he mentioned how sad it was that this page was in such horrible shape. I don’t think he meant it in a way that he was trying to encourage me to work on it. Tom knows that the GSoW team has far more projects than it can handle in a normal year of everyday editing. He knows that we are juggling pages and begging for editors to join this project. He also knows that we have scored some excellent re-writes and left skeptical links on some of the big hitters (Bill Maher was the most recent). But I went to take a look anyway.

Here is what I found. Sad isn’t it? This lonely stub of a stub page was looking like someone had tied it to the top of the car and driven 12 hours across country. It didn’t take long, I went through the references and got photos uploaded and was able to clean up this page in a few days.

Here is the page as it exists now and these are the stats.

So this is my world. Our mission is to improve Wikipedia, promote critical thinking and support our spokespeople. All three of these things were accomplished with the Ingersoll rewrite. It isn’t my flashiest piece of work. I’m still unhappy with the arrangement of the photos, but don’t know what to do about it. That’s the wonderful thing about Wikipedia. Anyone can edit. And that “anyone” might just be you.

If you want to see flashy page makeovers and read about the Wikipedia World project where we are changing Wikipedia all over the world, then visit our blog. If you think you might have found your skeptical passion in this project. Welcome. Read through as much of the blog as you can, open a Wikipedia account, then friend me on Facebook. Let me know what you are interested in doing and I’ll get you busy. No experience required. We train, we mentor and we are people you won’t mind being seen hanging around the Internet with.

Links to blogs explaining this project.

All Summed Up – Overview of Project

SWIFT blog on JREF (March 2013)

Bratscal Blog

Young Australian Skeptics

Skeptic Ink interview

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Lovers of science and rationality bring their perspectives to different aspects of the reason- and evidence-driven life, including health, safety, ethics, education, relationships, art, language, and popular culture.

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Most people don’t approach multi-level marketing or income opportunities with enough skepticism to keep themselves safe, and they are lead on by people who are taught to use every unscrupulous tactics in the book ( and a few that are not) to exploit every type of cognitive bias in the brain to get people to commit and hand over their hard earned money.

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