Editor’s Note: Bruce Schneier is a security technologist and author of “A Hacker’s Mind: How the Powerful Bend Society’s Rules, and How to Bend them Back,” “Click Here to Kill Everybody” and “Data and Goliath.” The following essay is adapted from “A Hacker’s Mind.” The opinions expressed in this commentary are his own. View more opinion on CNN.
The Roth IRA is a retirement account allowed by a 1997 law. It’s intended for middle-class investors and has limits on both the investor’s income level and the amount that can be invested.
But billionaire Peter Thiel and others found a hack. As one of the founders of PayPal, Thiel was able — entirely legally — to use an investment of less than $2,000 to buy 1.7 million shares of the company at $0.001 per share, turning it into $5 billion in 20 years — all forever tax-free, according to ProPublica. (Thiel’s spokesperson didn’t respond to ProPublica’s questions about its 2021 report.)
Less profitable, but maybe more fun, was the “Pudding Guy.” In 1999, he found a loophole in how airline frequent flyer programs worked, buying 12,150 single Healthy Choice pudding cups at 25 cents each, giving him 1.2 million miles for $3,150 — and lifetime gold frequent flyer status on American Airlines.