Theme: Stop calling everything a Ponzi
- A Ponzi scheme is a fraudulent investing scam which generates returns for earlier investors with money taken from later investors. This is similar to a pyramid scheme in that both are based on using new investors' funds to pay the earlier backers. Elements:
- Fraud or illegal activity
- Using money from new users to pay existing users
- The promise of outsized returns
- Lead by a charismatic salesperson
- named after Charles Ponzi. In the 1920s, Ponzi promised investors a 50% return within a few months for what he claimed was an investment in international mail coupons. Ponzi used funds from new investors to pay fake “returns” to earlier investors. Ponzi Schemes | Investor.gov.
