This is a follow-up to my ATM Ponzi scheme article from a few months ago (which you can read here), as the pyramid continues to crumble.
First off, just about anything can be the building blocks of a pyramid scheme. For instance, let’s say 10-year-olds Betty and Clara decide to open 4 lemonade stands in their neighborhood, because they REALLY want money to go to the Taylor Swift concert. They use some birthday funds they had saved up to open their stands, but business is slow and they are only making about $20/week, which definitely won’t get them to their concert.
Being crafty entrepreneurs, Betty and Clara decide to bring in 2 investors, who buy into a sale-leaseback of the batch of 4 lemonade stands from them for an expected 10% annual return on their investment, and pay Betty and Clara a ‘management’ fee. Needing more funds to pay out those 10% expected returns, Betty and Clara then find 4 more investors for the next tier, who do a sale-leaseback on the same batch of lemonade stands from the first set of investors and also pay Betty and Clara a management fee. After a few more tiers of investors, Betty and Clara have enough money not only to see Taylor Swift, but to hire a limo, buy sparkly dresses, and pick up $90 ‘Karma’ hoodies for all their friends (in a weird twist of irony).
Now that Betty and Clara are in their “Lavender Haze”, there are no more investors coming in, and the entire ‘lemonade stand’ pyramid business that they have built falls apart. All the investors are left with is the original batch of four lemonade stands, which never generated any significant profit in the first place, and none of their funds.
Which brings us to the ATM Fund that is currently collapsing. Substitute “lemonade stands” with ATMs in the story above and “Taylor Swift concert” for fancy cars, private planes, etc., and that seems to pretty much be the current situation. The operator’s recent webinar even mentioned the sale-leaseback of ATM batches from one tier of investors to another, and blamed the lack of distributions on problems with raising enough money to pay for the most recent sale-leaseback agreement (e.g. finding enough investors to fund the current “bottom level” of the pyramid). So it’s not looking great right now for those ATM Fund investors. Most of the operators involved already have a track record of previously operating pyramid schemes (which they like to refer to as “failed businesses”) – maybe they should try their hand at lemonade stands next?! 🍋
Enjoyed this post? Subscribe to our free weekly newsletter! 📩
コメント