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Made Off ModelTM Estimates the Mechanics of a Ponzi Scheme

Canant Consulting Company announces the Made Off ModelTM. The program shows the impacts of a Ponzi scheme from an investor and operator viewpoint. The public model is available for free on the internet at http://canantconsulting.com/madeoffmodel.html . The model does not claim to represent the operation of Mr. Madoff; it is only an estimate of how a Ponzi scheme could operate.

The Investor View shows the potential impact of a Ponzi scheme for up to 22 years. It also shows the results if the money had been invested in a common mirror investment with the same cash flows. If the mirror account is exhausted, then the cash flows are funded with a loan. The investor summary compares the net gain of the Ponzi scheme with the corresponding mirror investments and shows the internal rates of return for the Ponzi and the investment mirror. The Investor View can be used as a tool to understand the actual loss incurred by investing in a Ponzi scheme.

The Operator View shows the impact of using later deposits to fund the cash flows for early investors. Since there are many factors in the operation of a Ponzi scheme, the model can only generally approximate any specific scheme without knowing the exact details of the operation. The Operator View can help answer the question, Where did the money go The scheme itself seems to absorb the money over time by paying the investors higher returns than the returns available in the general market and it eventually collapses under its own weight if the rate of new deposits slows.

The models can be customized to fit an investor'ss individual situation. Possible customizations include showing monthly transactions, comparisons with the benchmark of your choice, changes as requested by a tax or legal advisor, changes to match actual performance within the scheme, added analysis of gains, losses and performance, and formatting to fit special needs. Customization will be quoted on a project basis.

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