If someone cons you out of L$ is that a RL crime?

I agree Buster, if it's provable in a court that it was fraud, then the person can be sued....... if they have anything to take, and they are in a court district that can claim jurisdiction. I said in my previos post "The only way it would be a crime is if it was proven the intent of the scheme was to steal the money." I know fraud is always illegal.

However, many people do lose their money to legal investment. The point behind investing is taking a risk, the larger the risk the larger the reward. A bank recognizes this when the rates are higher for higher risk clients.

You might start business with investors paying the way only to end up bankrupt. That's legal and acceptable. As long as the intent of the venture wasn't fraudulant the creator of the corparation is protected from liability.

Unfortunately, the difference between a legitimate business and a ponzi scheme is very often in the eye of the beholder.

To some, Enron was pure ponzi. To others, it was just a problem with a credit crunch.

It's not, apparently illegal if the obvious pyramid scheme is to sell a product or service. Ala Herbalife, YTB Travel, Greatest Vitamin In The World, etc, etc.
So... I'm going to make a lame, barely-function service, and start a paramid chain that will make me millions, and eventually collapse on itself.
Then I'll simply hide all the money away somewhere with other people and cancel my account.

Anyone interested in promoting [ DELETED ]

Yeah, and I suspect setting up a thinly veiled pyramid in SL probably wouldn't be that hard.

I'll set one up.
Or... better put, my ALT will set one up.
Just send me your L$50 now, and save yourselves some time.

Actually, it's not a pyramid scheme if you are selling a product or service that in and of itself is worth the price paid. If you start a pyramid scheme selling Amway products and I buy the products because they are what I want to buy, then it is legal and not what the law would consider a pyramid scheme.

A bank service is a real service. I know people DO use these services in SL.

If you start any business, even a legal business such as a grocery store, and steal the investors money, you are breaking the law. That's not a pyramid scheme, it's theft.

The example was that of a bank. I don't consider a bank a pyramid scheme nor does the government consider it illegal. Just because you are being offered an opportunity to invest in a business doesn't mean you are being defrauded. You might lose all or part of your investment. There is the possibility the borrower doen't pay back the loan to the bank. Or you might earn a nice interest rate on your money. It's a risk. I would consider it if I could see a track record of the bank. I might start out investing small amounts. It would depend on the returns compared to the risk.

The example is not of a bank. Banks are highly regulated entities which are overseen by innumerable government agencies, private insurers, and independent analysts. It's not even a mutual fund or any other kind of investment instrument. It's a group which solicits for investment and gives a return on that investment without divulging how it's accomplishing the return. Which makes people such as blaze and I suspicious that it's really a Ponzi scheme, in which early investors are paid with the funds gained by new members.

This was the orignal post to this thread. The example is that of a bank. There are banks, at least one I know of, that do offer investment opportunities. I have heard others talk of borrowing and paying back an SL bank loan with interest.

As for the regulation of banks in RL, the US government insures these banks to the tune of $100,000 per account. That's why they are so heavily regulated. And even then, with all the oversight, banks colapse.

When I look into an investment, if I don't like the fact they aren't showing me their records, I invest elsewhere. But the truth is, I don't ask my RL bank to show me their financial records.

I'm not suggesting it's a good idea to invest in this kind of thing. I'm just suggesting such an offer may be legit.

Now, if it's created soley for the purpose of stealing investors money it would be illegal. That would be true of any business.

Robin weighed in on this:

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I think the conclusion generally is that everyone will do what's in their power (both legally and time wise) to stop / rectify this, however there is little legal history regarding this so it's not clear.

My guess you could probably make history if you did this.. but odds are you'll probably be history if you do.

It was a good question Blaze.

The Lindens are saying that Ponzi schemes are fine in SL, or they don't care about the issue, until after it is clear that the person running the scheme stops paying out and intends to keep the money. That might catch those who forget that they are supposed to cash out and leave at that point.

It hadn't occurred to me that someone would try this and then want to stick around.

Go for it blaze - its worked in the past...