Drake: “Not a Ponzi”

Among the many things I would like to add after reading this expose from The Post, is a response to Drake. As far as I know, he hadn’t directly addressed the Ponzi charge, at least not that I remember. The context is this:

“When you did the arithmetic … the cash [coming in] was being used just to pay two things – fees and income distribution – and that is the classic Ponzi scheme,” says Rodger Bacon, chairman of Australian fund group Trilogy. …

It seems as if Drake was interviewed for this piece, who seems to respond directly to Bacon:

Drake denies that Bacon’s theory is true.

“That’s ridiculous,” says Drake. “A Ponzi, as I understand it, is where there is no asset.”

Well now. So, all you need for fraud is some piece of asset, and everything is honky dory? What if that asset was there as a smokescreen, which is undoubtedly was, for as the article documents, it was completely overvalued, and there was essentially only one of them (of any real consequence) anyway!

So, there you have it, future fraudsters. Erect a Ponzi scheme, whereby you depend on new investments to pay your fees and for redemptions. All you got to do is make it seem low-risk and target retirees, and don’t forget … have some asset somewhere, yeah? Nevermind how much it’s worth, it’s just a smokescreen!

Peter Drake, you, sir, are evil.

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