Another Ponzi scheme??? By GOLDMAN SACHS???

Ok, ok... so, technically, this isn't a Ponzi scheme... but it reeks of something rather unethical...

Excerpts from http://www.nytimes.com/2009/03/17/business/17wall.html?_r=1&ref=business


"Working at Goldman has long been regarded as a sure path to riches. But Goldman’s employees are losing money on their personal investments — particularly in Goldman’s own elite investment funds, which have been considered one of the perks of working at the bank.
At least one of the vehicles, in a group known as the Whitehall funds, sank more than 50 percent last year. Another let its investors withdraw their money this year — at a significant loss.
But one former Goldman partner estimated that a quarter of the bank’s roughly 100 partners are now worth $5 million or less because of losses on their company stock and other investments.
The funds periodically require investors to add more money, and late last year, Goldman’s most senior management and board began to realize some employees might have trouble living up to this obligation after receiving low bonuses, according to a person briefed on the situation.
Employees in the funds are contractually obligated to meet requests for more capital. Several funds have such capital calls scheduled for April. Employees who fail to make the payments risk losing their jobs, according to a person familiar with the situation.
The new loans at Goldman are being offered to help employees meet capital demands from the internal funds and cannot be used for other personal needs, according to people familiar with the matter.
Goldman raised $20 billion in its most recent private equity fund and some $9 billion in the Whitehall real estate funds in 2007 and 2008.
About a third of the money in the funds typically comes from Goldman and its employees, and since 1991, the bank and its employees have accounted for $7.5 billion of the $26 billion in the Whitehall funds.
Others who borrowed against their stock holdings have been forced to sell at losses or put up more collateral against their loan. Goldman is one of many banks that has issued margin calls on its employees."


Those lines in red are very significant. Give the employees a large paycheck... then FORCE them to funnel it back into the company.
Suspicious?

In the 2nd place, these Goldman Sachs fellas are looking rather stupid, IMHO. Personally, I would NEVER sign up for some deal that contractually obligates me to pay in money over and over and over, over the years. Unless it's something like insurance, in which case I might consider it.

The thing is... what happens if disaster strikes and you can't afford to continue making payments? Actually, that's how most insurance companies make money... their clients lose their jobs, or some other misfortune occurs, which is non-claimable. And they are forced to terminate their payments and forfeit everything they've paid in up to that point.

Anyhow, basically, this is what has happened. Except, this is much worse. Terminating insurance is a "continue payment, or you will lose most of what you have invested so far". This Whitehall fund is "you've already lost most of what you have invested. Continue payment, or we will sack you"

...

Oh, and I'm wondering which idiots are going to take this deal to take these loans... this seriously smells of loan sharks... there is a LOT of unethical odour in this "you need to keep putting money into our special fund... no money? Well, do we have a deal for you... special (low or high interest i wonder) loans... we won't actually give you the money though, it'll go straight back into our coffers... trust us it's in your account... it will make both of us lots of money..."

So... so... dodgy!