The Great Andalusian Stamp Scandal

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The Financial Times recently had an editorial warning everyone about pyramid schemes as is illustrated by the recent stamp scandal in Spain;

“Two stamp companies have been accused by public prosecutors of embezzling money in a fraud involving 343,000 investors. Those investors were guaranteed high returns on their investments in what were said to be rare stamps, although experts believe the stamps have a low market value.

The Spanish companies have denied wrongdoing, but if the prosecutors are right, the stamp scandal is a Ponzi scheme in which the promised returns are paid to early customers using the cash from new ones. Such schemes efficiently channel money away from the many to the few and the majority lose everything. Stamps have a history in this regard: in 1920 Charles Ponzi promised impossible returns based on arbitrage of international postal reply coupons, initially from Spain.

It is hard not to feel sorry for the frightened investors. They should have realised that high returns cannot be guaranteed, but many have swallowed that old story before. Albania was consumed by pyramid schemes in 1997, after two-thirds of the population sought returns of 30 per cent a month.”

Spanish police had earlier issued the following statement;

"Potential investors were offered high returns from the purchase and management of a stamp fund, which was apparently made up of overvalued - or even fake - stamps and whose returns did not apparently come [from the fund] but from money received from new clients,"

Related Links;

- An earlier post about Pyramid Scheme Warning

- Stamps to Become a Marketing Vehicle;The U.S. Postal Service is allowing companies to create their own branded stamps for first-class mail. Instead of flags, you can expect to see a company logo; instead of photos of famous Americans, you might see pictures of your local real estate agent

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www.stamp-scandal.com
www.stamp-scandal.com

THe real history of the stamp bussines.

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This page contains a single entry by Paul published on May 24, 2006 11:12 PM.

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