Gold would seem to be the hardest fraud of all to pull, either you got it or you don’t, but one enterprising con man managed to pull the wool over investors eyes for millions. Gold investors lost a total of $12.8 million between May 2001 and the summer of 2002 and now have a little Ponzi schemer of their own to kick around. His name is David Copeland Reed.
Reed’s recent arrest brought to light how he set up an Internet bank called OSGold that he claimed was backed, not by the FDIC, but by plenty of gold bullion stored in an offshore vault.
Take a wild guess – you’re right. There was no gold. All Reed needed was a computer, a glib tongue, and the promise of a fund that delivered a 45% annual return with the principal fully guaranteed. How did he take deposits? He simply asked people to wire him their money and they did. “Customers” could even log onto the website and salivate at the huge gains they were making in the “foreign exchange market.” 12 months and 66,000 accounts later, one customer tried to withdraw $10 million and received an insufficient funds message.
Reed told the authorities that the bank was experiencing technical problems. Meanwhile he and the fam were stuffing cash into duffel bags and heading out for Mexico. Landing in Cancun, he bought cars, a nightclub, a gym, and a shopping mall. Later, he returned to the states (idiot), was arrested in Columbia, S.C. and could get 20 years and fines if convicted.
It goes to show you don’t need a fancy plan to pull a good old-fashioned swindle – just tens of thousands of people who believe your line of crap.
All right, gold bugs, you’ve got your bad guy now. Go get him.
