zlacker

> That being said, calling these platforms "ponzis" isn't correct, the most you can say is that they were front ends for a ponzi. It would be like setting up a front-end to receive investments, and then depositing the money with Madoff. I'm not saying that it is a legitimate business, just not a ponzi.

Something like this happened with Madoff in a very similar manner to what you describe.

Madoff was a board member on one the schools at Yeshiva University. J. Ezra Merkin was on Yeshiva University's investment committee. Merkin funneled some of the University's money directly into his own fund which turned out to be 100% invested in Madoff.

Now, in some ways this is an even bigger ethical breach. lets say Merkin didn't know that Madoff was sketchy, why does he have to use his fund as a middle man for the University's funds when Madoff is on the board so he presumably can invest the funds directly with Madoff. The only reason is to skim off the top. For others, who didn't have an entry into Madoff's funds themselves, perhaps the middleman has value (assuming the middleman really believes in the underlying investment, if they are just there to skim off the top, the I would say they are not fundamentally different than ponzi themselves, as they are just pulling a Sgt Shultz, "I see nothing, I hear nothing, I know nothing")