At 03:42 PM 12/18/2009, Jed Rothwell wrote:
Abd ul-Rahman Lomax wrote:
However, "bilked" may not be it. Rather, he set up a speculative
investment opportunity for people, under this particular theory:
"now that you know we don't actually have anything yet -- we might
find the magic wand waving technique! but, you know, those stupid
physicists say it's impossible -- you have the option of leaving
your money in, and as long as our research program can stay open,
you'll get payments from the new people buying in. So you can make
some money, if it lasts long enough.
That would be a Ponzi scheme. That's against the law, at least in
the U.S. If the authorities found out about it they would shut down
the company immediately.
This would depend on certain details, and, as well, on local law. My
sense is that it could be managed so as to not be illegal.
Is it legal for them to charge for revealing the reality of the
situation? That reality could include investigation of the devices.
The "leave your investment in" option could actually be a
reinvestment, i.e., the conversion of a payment for disclosure to an
explicit investment in the company, perhaps with preferred stock,
which then is paid based on the profits of the company, or perhaps
profits within a certain area, such as sales of disclosures.
To determine if this would be illegal in the U.S., I'd need to look
more carefully at our law. Multilevel marketing, though, runs on a
very similar process, and is legal if structured properly.
