At 11:20 AM 12/18/2009, OrionWorks - Steven V Johnson wrote:
From Stephen Lawrence
> ... But he's [MADOFF] **NOT** held up as an example of a
> "successful" con artist, because he (a) had no exit strategy, ...
Ok, then then what's Steorn's "exit strategy?"
I certainly don't know for sure. Depends on how greedy they are. Get
too greedy, they end up in jail or fugitives.
But if they stay short of that, the exit strategy is that Steorn
shuts down. The creditors are paid. Those who invested early on have
made more than their money back. Those who invested toward the end
may lose their investment. Standard, think of it as being similar to
those who buy stock in a company that is about to go under. If there
were refund provisions in the purchase agreement, they may get their
investment back, but if they waived the refund in order to gain
participation and payments as long as it lasts, well, they lose. And
their money is where the earlier investor profits came from, it we
look at it passed down the line.
The payments out would depend on income from payments. So if the
income collapsed, so do any payment obligations. As long as they keep
reserves for any debts and contractual payments that are fixed,
they'll be okay legally.
That's an exit strategy.
It's possible that they will never admit that it was a shell game.
Eventually, someone will break an NDA. But it might be a long time
before we find out what happened with certainty.
The whole Storn group (at the correct strategic moment) buys
themselves one-way tickets to the Camen islands? Nigeria??? ;-)
Nah. That's a naive exit strategy. The people running Steorn can walk
away with less money, but also greatly reduced risk. They merely need
confine the sheep to a carefully selected group that they shear, and
one that is informed about the risk, but simply neglects that as
unlikely to fall down, or just wants to gamble.Sean, the 3rd: "And
what did you do gramps?"
Sean: "Well, grandson, I bilked a lot of gullible people out of
millions by staging a sophisticated hoax in at attempt to prove to a
bunch of idiots that it's possible to extract blood from a turnip.
Enough of these dimwits fell for it that I was able to accumulate a
tidy little nest egg for my retirement years, and, oh by the way, fund
your college education. So, my grandson, what do you plan on studying
when you go to college?"
Sean, the 3rd: "Why, marketing, of course!"
You got it, actually. However, "bilked" may not be it. Rather, he set
up a speculative investment opportunity for people, under this
particular theory: "now that you know we don't actually have anything
yet -- we might find the magic wand waving technique! but, you know,
those stupid physicists say it's impossible -- you have the option of
leaving your money in, and as long as our research program can stay
open, you'll get payments from the new people buying in. So you can
make some money, if it lasts long enough. If it doesn't, well, there
is always risk in investment. We hope you will continue to study the
information we sent you, and perhaps work on modifications that might
find the necessary improvements, but, if not, you can still make a
profit. Our early investors have made 150% profit over a few years.
If you'd like out, now, you may request your refund, it will be
processed and refunded within a month. By the way, your nondisclosure
agreement continues to apply according to its terms. What has been
revealed to you must be kept in strictest confidence, I'm sure you
can understand why."
I'd call it clever, in fact. But I don't know that this is the actual
plan. It is merely a possible one that includes an exit strategy and
which explains just about everything except precisely how this got
started, which isn't that important. It may have begun with some
sincere investigation of an idea. But it didn't stay that way, they
found an opportunity and took it and ran with it.
