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My FIL luckily only put 25% of his and his wife's savings into a local ponzi scheme here in the Lamorinda (Bay) Area. It was kinda funny how he was bragging about how much he was making while everything crashed, now at least 2 million is totally gone. The "investment" was run by close friend's of theirs and their circle of friends, almost all of them lost considerable amounts of money (there was a 1 MIL minimum initial investment). One of his friend's had invested his entire retirement savings with them!
It's interesting to have been so close to it all. It was very close to the way Madoff ran his scheme. You had to be "in the know" and "invited" to participate. They had lavish yearly banquets were they all felt special and privileged. It was so obvious from the outside, but when you feel like one of the lucky ones who is allowed in all logic and reason flees.
http://money.cnn.com/2011/04/20/pf/ponzi_scheme_victims_retirement/index.htm
Every time I read yet another story about someone who lost everything on a Ponzi scheme, I just shake my head and say they have no one to blame but themselves. While I can understand, even sympathize with people that lose money on Ponzi scheme's, all too often they lose EVERYTHING! Investing 101, Diversify. Even if one of your investments is doing Great, you should never throw all of your money into one investment vehicle. Always make sure you are spreading your investments over several different investments. It protects you in case one of them suffers heavy losses (or get wiped out like a Ponzi scheme). They were all Greedy, Foolish and are paying the price. Sure they can belly ache how some guy took advantage of them, but in the end they just have to look in the mirror to see who really lost there life savings.