ABSTRACT
This chapter discusses the nature of trust, persuasion, gullibility, and greed, the social-dynamics that enable fraud. Financial markets and investing could not exist without the social dynamic of trust. Trust is defined as a culturally recognized behavior within a community that has a generally agreed-upon understanding of honesty and integrity, and that people well behave within the expected norms for that society. It is the act of having absolute confidence in someone or something. Theories of social connections and trust have been well studied among academics in sociology and psychology. In most white-collar crimes, a legitimate business has been established; it is the environment that affords the opportunity to commit a fraud. The power of persuasion is how Ponzi perpetrators convince their victim-investors that what he or she is promoting is a secure, guaranteed investment. Persuasion is using influence to convince the investor to act as the perpetrator wants.
