Years after Charles Ponzi was imprisoned for a fraud that cost victims millions of dollars in 1920, the state of Massachusetts determined it had recov

Dealing With Fraud by Denial

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2022-01-13 03:30:11

Years after Charles Ponzi was imprisoned for a fraud that cost victims millions of dollars in 1920, the state of Massachusetts determined it had recovered all the assets it could, and began to distribute them to victims, who stood to receive less than 30 cents for each dollar they invested.

To get the money, the victims had to turn over the notes they had received from Ponzi. But many of them refused to do so when the cash was offered in 1931.

Those who refused, wrote Donald Dunn in his book, “Ponzi: The Incredible True Story of the King of Financial Cons,” were “holding onto the belief that Ponzi somehow would yet make good on his promise of 50 percent interest.”

That was probably not the first, and certainly not the last, example of what might be called “buyer’s denial.” It is the belief that somehow a fraud was not what it seemed to be, and that there was still a way to avoid losing the money the victim had foolishly invested.

“One has to ignore a lot of data to come to that conclusion. But that may be better than having to admit to yourself that it is over and you’re never going to get your money back,” said Dean G. Kilpatrick, the director of the National Crime Victims Research and Treatment Center and a professor at the Medical University of South Carolina. “It stands to reason that some would prefer to believe something else.”