Ponzi Scheme

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Dictionary Says

Definition of 'Ponzi Scheme'

A fraudulent investing scam promising high rates of return with little risk to investors. The Ponzi scheme generates returns for older investors by acquiring new investors. This scam actually yields the promised returns to earlier investors, as long as there are more new investors. These schemes usually collapse on themselves when the new investments stop.

Investopedia Says

Investopedia explains 'Ponzi Scheme'

The Ponzi scam is named after Charles Ponzi, a clerk in Boston who first orchestrated such a scheme in 1919.

A Ponzi scheme is similar to a pyramid scheme in that both are based on using new investors' funds to pay the earlier backers. One difference between the two schemes is that the Ponzi mastermind gathers all relevant funds from new investors and then distributes them. Pyramid schemes, on the other hand, allow each investor to directly benefit depending on how many new investors are recruited. In this case, the person on the top of the pyramid does not at any point have access to all the money in the system.

For both schemes, however, eventually there isn't enough money to go around and the schemes unravel.

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'Ponzi Scheme'

  • What Is A Ponzi Scheme?

    http://www.investopedia.com/video/play/What-Is-A-Ponzi-Scheme
    ... LIFA Level I; CSC; CPH. Definitions; Investing; Personal Finance; Active Trading;
    Forex; Videos /. What Is A Ponzi Scheme? Next video: Tax Avoidance Vs. ...

  • Is The American Banking System A Ponzi Scheme In Disguise? ...

    http://financialedge.investopedia.com/financial-edge/0609/Is-The-American-Banking-System-A-Ponzi-Scheme-In-Disguise.aspx
    ... Is The American Banking System A Ponzi Scheme In Disguise? Posted: June
    25, 2009 10 ... "It's no Ponzi scheme. If it's a Ponzi scheme ...

  • What Is A Ponzi Scheme?

    http://www.investopedia.com/video/play/what-is-a-ponzi-scheme
    ... LIFA Level I; CSC; CPH. Definitions; Investing; Personal Finance; Active Trading;
    Forex; Videos /. What Is A Ponzi Scheme? Next video: Understanding ...

  • What is the difference between a Ponzi and a pyramid scheme?

    http://www.investopedia.com/ask/answers/09/ponzi-vs-pyramid.asp
    ... What is the difference between a Ponzi and a pyramid scheme? Pyramid schemes
    and Ponzi schemes share many similar characteristics ...

  • What Is A Pyramid Scheme?

    http://www.investopedia.com/articles/04/042104.asp
    ... scheme. Ponzi Schemes Named after Charles Ponzi, who ran such a plot from
    1919-1920, the Ponzi scheme is a fraudulent investment plan. ...

  • Affinity Fraud: No Safety In Numbers

    http://www.investopedia.com/articles/pf/09/avoiding-affinity-fraud.asp
    ... Madoff pulled off something that is often referred to as a Ponzi scheme, which is
    a type of affinity fraud. ... A Ponzi scheme is similar to a pyramid scheme. ...

  • Crime Vs Time: Madoff Faces Off Against Fellow Fraudsters ...

    http://financialedge.investopedia.com/financial-edge/0609/Crime-Vs.-Time-Madoff-Faces-Off-Against-Fellow-Fraudsters.aspx
    ... Charles Ponzi: $15 million = 14 Years (five federal, nine state) The Ponzi scheme
    traces its origins back to one of the greatest scam artists of all time ...

  • The Ghouls And Monsters On Wall Street

    http://www.investopedia.com/articles/06/monstersonwallstreet.asp
    ... While this smacks of what we have come to think of as a pyramid scheme, it is actually
    a creature of a different breed – what is now called the Ponzi scheme. ...

  • Bernie "Made-off" With Banks' Billions

    http://stocks.investopedia.com/stock-analysis/2008/Bernie-Made-off-With-Banks-Billions-STD-HBC1222.aspx
    The US$50 billion Ponzi scheme allegedly orchestrated by Bernard
    Madoff has victimized rich and poor across the globe. ...

  • Don't Be A Victim Of These Investment Scams - Investopedia.com

    http://financialedge.investopedia.com/financial-edge/0811/Dont-Be-A-Victim-Of-These-Investment-Scams.aspx
    ... (Learn more about the FDA's impact on pharmaceuticals. For more, see A Primer On
    The Biotech Sector.). Ponzi Scheme Nobody falls for that anymore, right? ...

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