A sucker is born every minute, and there’s an opportunist behind every bush.

The equivalent in the vernacular, of course, is this: Walang manloloko kung walang magpapaloko.

The get-rich-quick route has been the road to perdition for countless people over recent history.

And the worst thing is, people never learn. They always fall for glib- tongued con artists who never seem to fail to mesmerize people.

The con game has been elevated to almost an art form by Charles Ponzi.

According to Wikipedia, Ponzi became notorious for using the technique in early 1920. Ponzi did not invent the scheme (for example Charles Dickens’ 1857 novel Little Dorrit described such a scheme decades before Ponzi was born), but his operation took in so much money that it was the first to become known throughout the United States.

Wikipedia defined a Ponzi scheme as a fraudulent investment operation that pays returns to separate investors, not from any actual profit earned by the organization but from their own money or money paid by subsequent investors.

The scheme usually entices new investors by offering returns other investments cannot guarantee in the form of short-term returns that are either abnormally high or unusually consistent. The system is destined to collapse because the earnings, if any, are less than the payments to investors.

As more investors become involved, the likelihood of the scheme coming to the attention of authorities increases. The system eventually collapses under its own weight.

Well, guess what?   

Banco Filipino Savings and Mortgage Bank was operating as a pyramid or Ponzi scheme in the past years, using new deposits to pay old ones, and with its officers paying themselves and their lawyers much more than the bank was earning.

A Bangko Sentral  examination revealed that Banco Filipino’s average gross income for the years 2007-2009 amounted to around P242.5 million which would be insufficient to pay the average interest expense of P1.1 billion for the same period.

This BSP said this was because BF, to fund its operations and pay its officers, consultants and lawyers, offered depositors six-percent to 13.9-percent  interest for special savings deposits, while most banks were paying only 1.8 percent to 3.3 percent.

Instead of investing the deposits, the Bangko Sentral claimed, these were instead used to pay the interest on old deposits and its day-to-day operations, making its operations akin to a Ponzi or pyramiding scheme.

“In no uncertain terms, Banco Filipino’s only way of operating is to continue engaging in a Ponzi scheme where withdrawals are funded by later deposits,” the BSP said.

“In view of all of these undisputed facts, BSP’s action in recommending and thereafter placing Banco Filipino under the receivership of PDIC (Philippine Deposit Insusrance Corp.) was the only course left in order to protect Banco Filipino’s depositors, creditors, and the public in general,” it added.