Bernard Lawrence “Bernie” Madoff is a United States former stock broker, investment adviser, non-executive chairman of the NASDAQ stock market, and the admitted operator of what has been described as the largest Ponzi scheme in history. In March 2009, Madoff pleaded guilty to 11 federal crimes and admitted to turning his wealth management business into a massive Ponzi scheme that defrauded thousands of investors of billions of dollars. Madoff said he began the Ponzi scheme in the early 1990s. However, federal investigators believe the fraud began as early as the 1980s. On June 29, 2009 Madoff was sentenced to 150 years imprisonment and forfeiture of $170.179 billion

A Ponzi scheme is best summed up in the phrase “rob Peter to pay Paul,” meaning: use one investor’s money to pay the returns of another investor. The money in a Ponzi scheme flows through a central agent who moves it around creating the illusion of earnings. Ponzi schemes are successful because investors typically continue to reinvest their earnings into the scam. This constant reinvestment of securities causes a financial bubble to grow. Inevitably, the bubble reaches critical mass and implodes.

Group Life and Health Insurance is truly a Ponzi scheme in the classic sense, where the first contributors to the fund are paid benefits mainly out of the funds received from the contributions of later participants. The perpetuation of the returns that a Ponzi scheme advertises and pays requires an ever-increasing flow of money from investors to keep the scheme going. It is for this reason that Group Life and Health Insurance plans need you to commit to the scheme with monthly payments, payments that they illegally deduct from your employment pay cheques.

A Ponzi scheme is closely related to a pyramid because it revolves around continuous recruiting, but in a Ponzi scheme the promoter (insurance broker) generally has no product to sell and pays no commission to investors (policy holders) who recruit new “policy holding members”. Instead, the promoter (insurer) collects payments from a group of people, promising them all the same high rate of return (life and health benefits) on a short-term investment. In the typical Ponzi scheme, there is no real investment opportunity, and the promoter just uses the money from new recruits (new Group Life and Health Insurance Policy holders) to pay obligations owed to existing longer-standing members of the program. In English, there is an expression that nicely summarizes this scheme: It’s called “stealing from Peter to pay Paul.” In fact they take monthly Group Life and Health Insurance Policy deductions from your hard earned pay cheques and pay benefits to any number of other existing and new Group Life and Health Insurance Policy holders.

Ponzi schemes are quite seductive because they may be able to deliver a high rate of return to a few early investors for a short period of time. Yet, Ponzi schemes are illegal because they inevitably must fall apart. No program can recruit new members forever. Every Ponzi scheme collapses because it cannot expand beyond the size of the earth’s population. When the scheme collapses, most investors find themselves at the bottom, unable to recoup their losses.

A Ponzi scheme is a fraudulent investment operation that pays returns to separate investors from their own money or money paid by subsequent investors. Group Life and Health Insurance Policies are exactly the same type of fraudulent investment because it too pays benefits to separate investors (the insured) from their own money and from money deducted from the pay cheques of subsequent group policy holders. Ask any group life or disability insurance recipients how many of them feel secure based on the miniscule benefits they are receiving. This type of insurance Ponzi Scheme targets the middle class. This type of fraud is a Communistic spreading of wealth from the middle class to the poor, not from the wealthy to the poor. Policy contributions have always been cut off at a level of income associated with the middle class, leaving the wealthy free of liability on most of their income because group life and disability insurance benefits are capped, presumably making group life and disability insurance deductions, above the designated maximum level of income, unfair. In the end, the poor are still poor, the middle class has now joined the ranks of the poor, and the wealthy are now fabulously wealthy, which results are characteristic of any Communistic or Fascistic form of governance. The Life and Disability Insurance Communistic, Fascistic mantra has been: Give us your money and we will take care of you from the cradle to the grave.

Very few people come to their senses and see insurance brokers for what they truly are - criminals. Seriously, how can you personally benefit from a group life insurance policy, a policy that you’ve been duped into paying into for decades, when you are dead? You will never know if your beneficiary will even receive the money owed you from your policy. You will never know if the people you were looking out for will actually be taken care of, as stipulated by your insurance broker. The majority of policy claims never get the full stated value for the paid into policy. The insurance companies always decides in favor of their own survival and will use any and all excuses to not pay what is owed. Hurricane Katrina is the perfect example of insurance fraud by the insurance companies. Insurance companies like Allstate Insurance simply refused to pay their policy holders’ claims - both life and property claims. To this day, many insurance policy holders have still not been paid a dime.

Ponzi schemes continue to plague us and challenges the law enforcement community. In the U.S., the Federal Trade Commission is just one among many agencies that have the authority to file suit to stop this type of fraud. The Securities and Exchange Commission also pursues these schemes, obtaining injunctions against so-called “financial distribution networks” which in fact sell unregistered “securities.” The U.S. Department of Justice, in collaboration with investigative agencies like the FBI and the U.S. Postal Inspection Service, prosecutes ponzi schemes criminally for mail fraud, securities fraud, tax fraud, and money laundering.

A Ponzi scheme is built on the word-of-mouth of its early investors. Once a schemer is able to get paid a return on initial investments, those happy investors urge others to take part in the scheme. In a scheme like Bernie Madoff’s, which operated for the better part of 15 years, it’s likely that many early investors made money and got out before the bubble burst. However, that doesn’t put them in the clear. There exists a “clawback provision” in the case of Ponzi schemes, wherein a court-appointed receiver or trustee can sue any investor for money he has received in excess of his investment. Anyone breathing a sigh of relief for pulling out early of a Ponzi Scheme (Group Life and Health Insurance Policy included) may find himself on the business end of a lawsuit.

Sen. Lindsey Graham (R-S.C.) forcefully criticised Obama’s health care reform bill in an appearance on NBC’s “Meet the Press” earlier this year. Graham compared it to a “Ponzi scheme”: “You– you take $570 billion out of Medicare to pay for the health care bill. Then you’re using that same $570 to say it lowers the growth of Medicare over time,” Graham said. He added: “So, it is a house of cards. It is a Ponzi scheme of the first order. It’s gonna blow up the deficit. It’s gonna affect every business, every family in this country…”

Calling the Senate health care bill a package that Ponzi schemer “Bernie Madoff would really envy,” Republican Sen. Jon Kyl stated that the legislation is long on promises but short on accounting. “Any private or any publicly traded business that claimed it was making a profit because it booked revenue over 10 years but only booked expenses over six years would wind up in jail. That’s what this bill does, that’s just many of the frauds and hat tricks in this bill,” Kyl said on “Fox News Sunday.”