Here’s a classic ponzi scheme right in our own backyard.
This guy owned this house since 1988, and had been an active contractor in the community. When the market was hot, borrowing money to do remodels and flippers worked out fine for him.
But when the music stopped, he kept borrowing.
Eventually the cross-collateralized mortgage holder foreclosed in 2007, and took back two properties, the one in the video and another on La Veta. After the bankruptcy, the next lender in line, the $800,000 lady, got the third property. The remaining 10-20 individuals who lent money got burned for at least $2 million, and maybe more.
He preyed on people’s trust – he had friends in the community that recommend him to other friends. Because he seemed like a nice guy, more and more people kept lending him money unchecked, and eventually the scheme failed: