Instead of using investors’ money to turn profits with IRCs, he simply paid exiting investors with funds collected from new investors. Using this IRC plan as bait, Ponzi lured investors into what would become the basis of all future Ponzi schemes. Ponzi came up with the idea of buying IRCs in one country and exchanging them in a different country, where their value was higher. When people received a letter from overseas they also received an IRC that could be redeemed for the money needed to send a reply. Actual loss or injury suffered: The victim suffered some actual loss as a direct result of their dependence on the false statement.However, persons known to be illiterate, incompetent, or otherwise mentally diminished may be awarded civil damages if the perpetrator knowingly took advantage of their condition. Reliance on rhetorical, outrageous, or clearly impossible statements or claims may not amount to “reasonable” reliance. Reasonable reliance by the victim: The level to which the victim relies on the false statement must be reasonable in the eyes of the court.Intent to deceive: The false statement must have been made expressly with the intent of deceiving and influencing the victim.Knowledge of falsehood: The party making the false statement must know or believe that it is untrue or incorrect.For example, the false statement contributes to a person’s decision to purchase a product or approve a loan. The gravity of the false statement should be adequate to substantially affect the victim’s decisions and actions. A misrepresentation of a material fact: A false statement involving a material and pertinent fact must be made.