Bart Chilton is the author of Ponzimonium: How scam artists are ripping off America. Chilton, a member of the Commodity Futures Trading Commission for the past five years, wrote the book after watching countless Americans lose their life savings in these elaborate schemes.
Chilton told The Daily Caller about money, Madoff, and the fast-multiplying scams that are far more common than most of us think..
What was your original motivation for writing this book?
Having had a front row seat to the financial damages visited upon the victims to these crimes, and perceiving patterns in the manner in which they operate, I believed that the publication of such a book would educate potential future victims and provide the public with additional knowledge to educate themselves.
Most people do not understand the role of the CFTC. Explain to us what exactly the
commission is responsible for, and what your role is in uncovering these Ponzi schemes.
The Commission oversees the futures and options markets, as well as retail forex (foreign currency) markets, among other things. Our agency seeks out Ponzi schemes where victim funds were purportedly used to trade futures, options and forex. Because these financial instruments are “leverage” transactions, unscrupulous people can use these instruments to lure unsuspecting customers with promises of significant returns on relatively small amounts of money invested with little to no risk.
What kinds of people tend to become victims of these schemes?
It cuts across all socioeconomic categories; no class or category is really safe. For example, many banks were a part of the Madoff Ponzi scam and you would think banks would undertake the appropriate due diligence. So the victims really do span many groups.
Approximately how many tips do you get every month from ordinary people? How many are you currently investigating?
I can’t specify how many Ponzi scheme tips we get, but generally our Enforcement division receives roughly 300 tips [each month], or complaints, or other communications from the public.
The number of Ponzi schemes has increased substantially in recent years. What do you think that says about our culture?
With increased complexity in the instruments people invest in comes decreased transparency. It is difficult to understand how multifarious the market is. Every investment carries some degree of risk, for investments that are promising to yield higher than average returns people need to be aware even more so of that risk.
Are Americans more likely to make these investments in a depressed economy, when the country seems strapped for cash?
Ponzi type schemes have existed since the time of Dickens. However, Ponzi schemes have escalated; when the economy is the way that it is, people look for quick money. Mixing this with the increasing complexity and the type of investments available creates a breeding ground for schemers.
You offer readers some “red flags” for Ponzi schemes, along with tips for investors. What do you think is the most important thing for people to remember before they invest their money?
Education is the key to not becoming a victim. The website www.mymoney.gov, is a great financial literacy tool offering tips and easy to use instruments to help clarify financial investment terms and conditions. And, of course, they can buy my book.
What other tools does the government need if it’s going to find and prosecute scam artists?
Consumer education is the primary objective. We have created a consumer outreach office to promote financial literacy and education. We have also established a consumer outreach program and protection fund. The fund is available for payments to whistleblowers who provide information in connection with fraudulent activity or violation of our Commodity Exchange Act.
Has the Obama administration or Congress had an impact on your ability to root out these scams?
The Obama administration has sought additional funding to help implement the expanded powers we received under the Dodd–Frank financial law. Congressional lawmakers however, have reduced our budget — potentially limiting our capabilities to investigate and prosecute fraudulent activities.