MONEY
My Cousin Funded His Fancy Life with Ponzi Schemes
He recruited investors by being a great dad
When my mother texted me the sad news that my cousin died, I googled his name expecting to find the date and time of his memorial service. Instead I found news articles detailing his recent years as the architect of Ponzi schemes.
The stories described how he befriended other parents through his kids’ schools and sports teams and then invited them to invest in his business schemes.
But instead of paying investors back their principal and high returns through the success of his businesses, he paid them back with the investments of others. Until he ran out of new investors. Then he didn’t have any money to pay current investors back, and the pyramid collapsed. Tale as old as time.
So why did people fall for it?
Image of the perfect dad
My cousin was known for being an involved dad, and seeing him in such a context built trust. Parents saw him coaching a youth flag football team. They saw him at his kids’ school events. The barrier for him to earn their trust was lower because some trust was already there, through the shared experience of parenting.
He was also funny and personable, further lowering the trust barrier. He expressed empathy for the hardships parents shared with him. One person’s son was having surgery, and another was struggling to cover insulin expenses for a diabetic child. My cousin told them he was praying for them.
People trusted him with their money, because he seemed like one of them, just a little wealthier and more successful. When he started giving investors the runaround, they were, of course, stunned. The revelation that someone who said he wanted to help them, a fellow parent, was financing his wealthy lifestyle with their money surely haunts them.
I was struck by how gracious one of the victims was in interviews with the local publication that unraveled this tale of deceit. The victim, who said he got some of his money back, speculated that my cousin was once a legit businessman, buying and turning around legit companies. But, somewhere along the way, he started paying investors back with money he got from new investors and using new-investor cash to pay his own bills.
Signs his wealth was ill-gotten
My cousin had bills. He had two ex-wives and five kids. He lived lavishly. My mom received fancy invitations to fancy parties. When she showed me the invitations, which sometimes came in small gift boxes, I studied them, having never seen anything quite like it.
My mom attended several of his parties over the years, including a fundraiser that involved the raffling off of a new car. My brother-in-law was in attendance, and he swore the raffle was rigged. My mom always came back from his parties with tales of an over-the-top lifestyle.
My mom, sisters, and I speculated that his riches were ill-gotten. There were signs.
Years ago, my niece sent me a link to a story about a lawsuit in another state. A woman accused my cousin of bilking her out of her life savings for an investment opportunity that wasn’t.
Many years before that, I interviewed a woman for a story about raising children to love fitness. In our interview, it came to light that her husband worked for my cousin, operating a beverage company he owned that sold sports drinks for children.
A few months later, I mentioned the coincidence to my aunt, my cousin’s mom, and she casually said her son shut down the beverage company. “Oh, that guy,” she said of the husband of the woman I interviewed. “I know about him. He keeps calling.”
I got the impression my cousin spent a lot of time dodging phone calls.
His good side was very good
The stories I read after my cousin’s death, which won a statewide journalism award for thorough and detailed reporting, left me in disbelief that my cousin harmed and betrayed people in this way, people whose kids went to school and played sports with his kids.
My memories of him are fond. When I was little and he was a young adult, my family spent a couple of Christmases at his family’s house. He paid so much attention to me, playing with me and making me laugh.
As an adult, I always saw him doting on his children, laughing, and appearing carefree. When his sister-in-law got cancer, he was supportive throughout and was at her bedside when she died. When my mom told him I was going through the adoption process, he offered to help, as he was an adoptive dad.
One of my favorite quotations is from death penalty lawyer Bryan Stevenson: “Each of us is more than the worst thing we’ve ever done.”
He was sick for two years before he died in his mid-60s of what sounded like long Covid.
While he was sick, he was arrested at his home on fraud charges in another state, a matter that seems unrelated to the con involving families in his parent network. He was taken to jail with his oxygen, but without his steroids, according to a request for bond his lawyers filed.
In the mug shot, my cousin looks decades older than a man in his early 60s.
A family history of grift
After he died, there was no funeral or obituary that I could find. His oldest child wrote a loving tribute on social media, remembering her dad as a wonderful, devoted father.
After reading the tribute, I vowed to quit googling for more tea. I’ve sipped enough, but my desire to know more is strong. Our paternal grandfather was a grifter who went to prison for a scheme involving wholesale groceries. My mother, as a teen, sat in the courtroom during his trial in an unsuccessful attempt to gain the jury’s sympathy.
Does grift run in my family like diabetes or flat feet?
Instead of going down that rocky path, I am trying to sit with the many lessons from his story. While it’s easy to assume people with extravagant lifestyles are smarter, harder-working, luckier, or just plain better at making money, we aren’t privy to the balance sheet. Many people who live large are in credit card debt or worse.
For people who need money fast, to pay for a child’s insulin, a mother’s assisted living care, or some other urgent need, the allure of quick, guaranteed high returns is powerful. It’s hard to be objective when you’re desperate.
The way most people attain wealth is through investing and holding. Compound interest works its magic at a glacial pace. Patience is required.
Finally, a better way to build financial trust with someone is by checking the person’s license, qualifications and track record. Get leads through personal referrals from people who know the person in a professional and financial context.
Being a good parent is a wonderful quality, but it’s not a reason to trust someone with your money.
About Priscilla Graham
I’m a writer and nonprofit communications professional in Georgia. I write about my journey to retirement. Love dogs!
