There's also the weird blip in all of this of the hashpoint conversion. If you have Paycoins from the hashpoint conversion, they're still worth more than if you had "mined" BTC instead of getting hashpoints. I think Paycoins would have to dip below 50 cents for the hashpoint "mining" to have not been worth it.

That's still the one part of this that gives me a bit of pause. That hashpoint conversion cost him money, as it released Paycoins into the market depressing the price, and it gave tons of people a way to break even, or even make some profit, at his expense. It's the one thing that makes me think that all of this fraud wasn't really meant to be a scam. That he really thought these lies would lead to everyone making money.

Or it could have been a confidence trick. IDK. It still stands out, though.

Initially the promoter will pay out high returns to attract more investors, and to lure current investors into putting in additional money. Other investors begin to participate, leading to a cascade effect. The "return" to the initial investors is paid out of the investments of new entrants, and not out of profits.

Often the high returns encourage investors to leave their money in the scheme, with the result that the promoter does not have to pay out very much to investors; he simply has to send them statements showing how much they have earned. This maintains the deception that the scheme is an investment with high returns.

Promoters also try to minimize withdrawals by offering new plans to investors, often where money is frozen for a longer period of time, in exchange for higher returns. The promoter sees new cash flows as investors are told they cannot transfer money from the first plan to the second. If a few investors do wish to withdraw their money in accordance with the terms allowed, their requests are usually promptly processed, which gives the illusion to all other investors that the fund is solvent.

http://en.wikipedia.org/wiki/Ponzi_scheme