Warren Buffett’s Fake Solar Generators

The simplest scam is, you tell people that you will invest their money for them and make them more money, they give you their money, and you steal it. They tend to notice this eventually, though, and get mad about it. There are ways to delay or mitigate that. You send them fake account statements, you tell a compelling story about how their money disappeared, you do a Ponzi scheme where you steal later investors’ money to pay back earlier investors, etc. You can make it work, at least for a while, but there is always that central difficulty, which is that your investors want their money back and you have stolen it.

So it is tempting to design a scam where they don’t want their money back, a scam where getting an investment return is not the investor’s main purpose. Fake charity (they give you money, you say you will spend it on some unobservable charitable endeavor, you steal it) is one obvious approach, but has some difficulties: You need to find marks who are motivated by charitable purposes, and for many scammers it is easier to inhabit the character of a successful businessman than that of a philanthropist. The better approach is a scam where investors do expect to get something of value for themselves, but not from you. It’s even better if they actually get it.