The real price of everything, what everything really costs to the man who wants to acquire it, is the toil and trouble of acquiring it.
—Adam Smith

Jefferson Randolph “Soapy” Smith II had been a scam artist, huckster, and crime boss for more than twenty years before he packed up his schemes and set out in 1897 for Skagway, Alaska, a boom town of the Klondike Gold Rush. Over the course of his career, Smith had established and lost a pair of legendary criminal kingdoms; one in Denver, another in Creede, Colorado. (Before lighting out for the tundra, there had also been a brief Mexican sojourn in which he tried to convince President Porfirio Diaz to install him as leader of a “foreign legion” that amounted to no more than a violent gang.)

Why fixate on Skagway? It showed raw potential. The Klondike Gold Rush evoked tantalizing visions of found wealth for some, but Smith meant to make a killing on optimism itself. More than 100,000 prospectors flocked to the Yukon region in the northwest of Canada between 1896 and 1899, and Skagway was a crucial port near the Chilkoot Pass, the “Golden Staircase” for prospectors heading into gold country. Smith would fill it with his thieves and take any dreamer who washed up on the docks for everything he had.

This is the nature of the successful con. The mark must believe or expect that they stand to benefit. Smith’s own nickname, “Soapy,” was a testament to this sharp insight. He’d gotten his start practicing a classic sales swindle:

He set up his tripe and keister (stand and suitcase) on the sidewalk and began a spiel on the wonders of the soap he was offering for sale. He claimed that in order to increase sales, he offered cash prizes in several of the soap packages. He would begin to wrap up the cakes of soap with plain paper. Every couple of bars, he would show the crowd some currency, ranging from $1 to $100, and wrap the bill in with the soap. After mixing all of the wrapped packages together, he offered them up for sale. The price started at $1 and increased from there in auction style as the soap packages dwindled.

Planted among the crowd, of course, were Smith’s shills, who would inevitably purchase the only bars with bills wrapped around them and make a big show of their “luck,” pressing onlookers to buy lots in the rigged lottery. It was the same surrender to illusion that defined the most piquant aspect of Smith’s operation in Skagway: A fake telegraph office where messages—for a fee—were transmitted no farther than the walls, that being where the wires ended. (One wonders if any customer became suspicious about a lack of replies. Real telegraph lines appeared in 1901, three years after Smith’s death in a shootout.)

More than a century later, suckers at the edge of industry are still chasing promises of the too-good-to-be-true variety. The appealing element is no longer gold, but silicon. Recently, Bloomberg News detailed a fraud all the more audacious for its adherence to cliché. The headline: “How a Con Man Stole Millions Selling Fake Facebook Shares.” In April of 2011, a soi-disant entrepreneur named Troy Stratos posed as “Ken Dennis,” who claimed to be a fund manager for billionaire Carlos Slim and family. Over five months, Stratos allegedly bilked “$11.25 million from a group of East Coast millionaires looking to buy scarce Facebook shares before the company went public.”

That the greed of the wealthy is more completely exploited than that of the lower class speaks to the disorienting power of privilege. Not only do the rich have more to gain in the marketplace than the poor—as they possess the reserves of liquid capital to parlay their vast returns—but they additionally figure their connections and prestige can easily guarantee a riskless, unpublicized windfall. They’ll rarely fall for a game of chance, often the sure bet. Stratos knew that Goldman Sachs had in January 2011 withdrawn the opportunity for its U.S. customers to buy $1.5 billion in Facebook stock from the bank ahead of the IPO, citing a media circus that “might not be consistent with the proper completion of a U.S. private placement under U.S. law.” American investors were eagerly sniffing out sellers elsewhere.

Dazzling such clients with sleight-of-hand networking—even hooking up with David Ebersman, Facebook’s chief financial officer, by “telling him he had office space in Los Angeles that Facebook might want to rent”—Stratos convinced his buyers that he had a direct line to company employees hoping to cash in on their private holdings. As the money poured in from ESG Family Office, a Pennsylvania firm “founded on the premise that ultra high net worth individuals and families have outstanding professional relationships already in place,” Stratos was spending at a rate of $40,000 a day, according to his victims’ lawsuit.

This cash, fittingly enough, financed a high-roller’s life. Stratos put the money toward “paying old debts”—including $333,000 to a professional gambler—as well as “trying to develop a restaurant in Las Vegas, and buying a Range Rover, a Chevrolet Camaro, and a $200,000 Audi convertible,” according to ESG’s complaint. He also reportedly dropped $50,000 on the deposit for a Las Vegas condo. Where better to set up shop than that gimcrack neon mirage in the desert where fools come to be separated from their money?

And yet it’s almost natural to admire Stratos for pillaging the pockets of the one percent. Soapy Smith is today a pioneer folk hero. Whatever you might say about either, you have to admire their cunning. Plenty of people come by their fortunes dishonestly, but men like these spare us the dreadful sideshow of pretended innocence. There can be no doubt about what they are, and our affection for their antics traces back to the fabled deceptions of Homer’s “many-minded” Odysseus. Have they not, by dint of effort, in some sense earned their spoils?

For a dry assessment of the characters ruined in these hoaxes, meanwhile, we turn to The Economist, which not long ago recounted the tale of Gregor MacGregor, a Scotsman who in the 1820s convinced several of his countrymen to raise cash for the imperial development of a (fictional) Latin American country they’d personally colonize. MacGregor maintained that “Poyais,” eight million acres carved out of modern-day Honduras, resembled paradise.

But some of the promises sounded very iffy. The natives were not only friendly, but loved the British. The soil was not just fertile, but capable of sustaining three maize harvests per year (elsewhere, two would be good going). The water supply was not just clean, clear, and abundant, but in the streams of Poyais there were chunks of gold. How did the settlers, a group that included a banker, doctors and experienced military men, fall for this nonsense? New research by Tamar Frankel of Boston University suggests some answers. Ms. Frankel studied hundreds of financial cons, looking for recurring patterns. One set that pops up time and time again describes the traits of the victims. They tend to be excessively trusting, have a high risk tolerance, and—especially the more educated victims—have a need to feel exclusive, or part of a special group.

MacGregor, intuitively or not, understood this last dimension of credulity and worked it, claiming that “hardy and adventurous Highlanders” were especially well-suited to the demands of a rugged (if bountiful) virgin territory. Thus has the modern history of westward expansion always twined with confidence shams—it’s not just that victims imagine the light of prosperity at the end of a dim tunnel; they see their triumph as a manifest destiny that will not and cannot be accorded to skeptics or cynics. Their faith is what will raise them up. Little do they suspect what the cynics can fashion from a stubborn insistence on higher fate: towering empires of hot air; entirely false reputations; common knowledge that’s neither.

Irrational groupthink is such a familiar glitch in the global economy that speculating on the next speculation is a viable business model. When you get right to the bottom, it’s not enough to win—someone else has to lose. The fraudster’s perplexing charm is fastened to his or her ability to expose this zero-sum cruelty on a grand scale, punishing those who dared assume they were any better than the rest. The purest, simplest cons involve the rube underestimating his hustler, believing he’s gotten one over on them. That way, by a strange symmetry, they get what they deserve: less, or much more, than they bargained for.