You wouldn't then attract the numbers required to make it work. As Dally said, it's all about greed and a mistaken belief that some whizz-kid has managed to buck the prevailing rates of return.

I know that really. One of the most famous Ponzi schemes was operated by Lou Pearlman, the music 'svengali' who controlled O-Town and Nsync, and other boybands we've never really heard of. If you read his wikipedia page, he was a crook of the highest order. He won't be seeing daylight for some time yet, if ever.

BCCI was another. They attracted small to medium depositors by offering interest rates way above what could be found on the high street. Headed by a Pakistani, the bank attracted many Muslim Asian investors, even though making money from money is classed as Riba (usury), they instantly gorgot the Koran when it suited them. BCCI was also involved in some serious money laundering for organisations and individuals as diverse as Saddam Hussein, Noriega, the CIA and various Colombian drug cartels.

I remember reading in Private Eye about how corrupt BCCI were for months (and possibly years) before it all went tits up. It still amazes me that anyone still had any money in it by the ned.

The most sadly, funny thing I recall about BCCI was allegedly that they wrote certain of the key loan documentation in Urdu. When the auditors sent an Urdu speaking member of staff to join the audit team someome at BCCI complained about the lad / girl and he was taken off the job!