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- Named after Charles Ponzi
- Usually promises high returns in the short termMuseum of Hoaxes: Ponzi Scheme
- Type of pyramid schemeSecurities and Exchange Commission: "Ponzi" Schemes
- No product involved
- Money moves up a chain to the founder
- Continually requires new people to continue the scheme
- Recruiters point at the successful top figures to lure in new participants
- Most people involved never realize it is a scam
- Old adage "if it sounds to good to be true, it probably is" applies
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A Ponzi scheme is defined as a kind of financial fraud in which a single person or tight-knit conspiracy offers high returns on an investment, but does not actually invest the bulk of the money that is solicited. Instead, the kingpin will take a portion of the money for himself, and pay early investors with money from more recent ones.Securities and Exchange Commission: [http://www.sec.gov/answers/ponzi.htm
Ultimately, the kingpin and a minority of investors can become wealthy by lining their pockets with other investors' money. In March 2009 the IRS announced that victims of Ponzi schemes could file for a refund of capital gains taxes paid on phony dividends received through the scheme.http://www.washingtonpost.com/wp-dyn/content/article/2009/03/17/AR2009031701911.html?hpid=moreheadlines
Definition of Ponzi Scheme
According to the U.S. Securities and Exchange Commission, a Ponzi scheme is defined as a "rob-Peter-to-pay-Paul principle, as money from new investors is used to pay off earlier investors until the whole scheme collapses."Securities and Exchange Commission: "Ponzi" SchemesCharles Ponzi's Scheme
Between 1919 and 1921, an Italian immigrant named Charles Ponzi administered an investment plan that would become the prototype for the Ponzi scheme. Originally, Ponzi discovered a way to legally take advantage of exchange rate differences in postage stamps, and began to solicit investors in the operation. Within months he had amassed up to 40,000 investors and ended up paying out from the investments themselves, rather than actual profits.Museum of Hoaxes: Ponzi Scheme He was convicted on fraud in 1921, after making millions for himself.Museum of Hoaxes: Ponzi Scheme-
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Ponzi Scheme Questions
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How does the Ponzi Scheme differ from the Pyramid scheme? 4 AnswersI can explain it in easier terms. In a Ponzi scheme, everyone pays to the main investor. In a Pyramid, you pay (and sometimes only know) to the person above you... read more -
Why do you think people fall for Ponzi Schemes?(www.nytimes.com/2009/01/28/business/28ponzi.html?_r=1&hp) 3 AnswersPeople are not strictly rational. None of us really take all the facts into account when we make decisions. We just don't have time. We're often driven by ho... read more -
I was just thinking. Isnt social security a Ponzi Scheme? 3 AnswersOf course it is. The biggest on the planet, in fact. read more
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Ponzi Scheme on Amazon
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The Hit Charade: Lou Pearlman, Boy Bands, and the Biggest Ponzi Scheme in U.S. History - $24.95
Without Lou Pearlman, there would have been no Backstreet Boys, no *NSYNC, and possibly no Justin Timberlake. In the late 1990s, Pearlman's boy bands ushered out guitar-and-angst-d...Amazon
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Madoff: Corruption, Deceit, and the Making of the World's Most Notorious Ponzi Scheme - $14.95
In the first comprehensive account of this epic scandal, Peter Sander traces Madoff’s rise from schoolboy to Wall Street trader, from money maker to money ...Amazon
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Ponzi's Scheme: The True Story of a Financial Legend - $14.95
You’ve heard of the scheme. Now comes the man behind it. In Mitchell Zuckoff's exhilarating book, the first nonfiction account of Charles Ponzi, we meet the charismatic rogue who l...Amazon
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Ponzi's Scheme: The True Story of a Financial Legend - $14.95
It was a time when anything seemed possible–instant wealth, glittering fame, fabulous luxury–and for a run of magical weeks in the spring and summer of 1920, Charles Ponzi made it ...Amazon
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On Twitter Powered by Twitter
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Trustee: It was a $100 million 'Ponzi scheme' <<>> http://ow.ly/IDJ9
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@GlobalGrind we used to make out, kissing each others face off,Fell for the ponzi scheme, damn shawty just Made-off
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Wow RT @FBIPressOffice: Minnesota Executive Convicted of Orchestrating $3.65 Billion Ponzi Scheme: Thomas Joseph Pett.. http://bit.ly/8yXOlr
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Protesters outside of the BofA headquarters (less than 10) with crudely homemade angry signs about the bailout being "a Ponzi scheme." Huh?
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