If it seems too good to be true, it probably is. This might be the conventional wisdom among savvy investors, but they do not always abide by it. Hongkong and Shanghai Banking Corp (HSBC) learned this the hard way. Last month, Hong Kong's largest bank watched roughly US$1 billion disappear into thin air. Like many, HSBC had invested in what is being called the biggest white-collar crime in history: the Bernard Madoff scam. Charismatic and gentle-looking, 70-year-old Madoff ran a reputable investment operation in New York. In 2005 he convinced wealthy companies around the world to invest their money with his company, promising returns of 10 per cent a year, far higher than the 2-3 per cent yields of most savings accounts. A wide range of parties came on board, ranging from banks to charities to wealthy celebrities. In the beginning, Madoff delivered the promised returns to his investors. He claimed they were profits from his own smart investments. In reality, the 'returns' came out of the investors' own money. In other words, Madoff was collecting billions of dollars of other people's money and redistributing portions of the investments as 'yields'. For years nobody questioned the unusually high yields, perhaps because Madoff came across as a trustworthy, shrewd adviser. In public he characterised himself as a hard-working, family-oriented philanthropist. He donated millions to lymphoma research and numerous educational, cultural and health charities. Madoff's fraud unravelled weeks before Christmas 2008, when his sons turned their father in to the police after he allegedly confessed the scam to them. As the economy took a nosedive and investors found themselves strapped for cash, Madoff knew they would demand their assets back - in full. Having lied about false profits for years, Madoff had no money to distribute. Madoff's sleight of hand that fooled so many into giving him money for years was a classic Ponzi scheme. A Ponzi scheme is an illegal investment operation that appears to pay high returns on investments, though the returns actually come out of the investors' own capital. The term was named after Charles Ponzi, a calculating businessman who tricked thousands of Americans into investing in foreign postal stamps in the 1920s. Ponzi told investors that he could provide a 40 per cent return in 90 days - a lot more than the single-digit interest rates offered by banks at the time. During one three-hour period, he is said to have collected as much as US$1 million from eager investors. Though a few early investors were paid off to make the scheme look legitimate, an investigation found that Ponzi had only purchased about US$30 worth of the international mail coupons. Almost a century later, people are still being fooled by such 'get-rich-quick' scams, even those bordering on the ridiculous. Last February, mainland authorities uncovered a Ponzi scheme related to ant farming. Government-endorsed Yilishen Tianxi Group made pharmaceuticals made of ground-up dead ants. The company encouraged investors to buy boxes of ants, providing 'special instructions' about how to raise the insects, which included spraying them with a mixture of water and honey at 9am and 4pm daily and feeding them bits of cake and egg yolks every three to five days. When the entire thing was revealed as a scam, mass protests broke out, and government regulators have been scrambling to stop further incidents. On December 20, the central government announced plans to crack down on Ponzi schemes and other unauthorised financial products, including pawn shops and consulting firms. Yilishen's founder has been arrested, and it is likely he will get a death sentence. Prosecutors in the US think Madoff will get a life sentence.