Ponzi Scheme

  • A Ponzi Scheme is a type of fraud which continually requires new investors in order to pay off the existing ones, as no real income is being generated elsewhere.
  • When there are no more new investors to input their money, the existing investors fail to get paid an income, and the scheme collapses. Although the scheme had existed previously, it is named after Charles Ponzi who famously operated such a scheme during the 1920’s in the USA.

 

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