PONZI SCHEME

For a bit of a departure from the usual, this edition focuses on a type of fraud known as a PONZI SCHEME—also known as a PYRAMID SCHEME—terms people often hear these days but tend not to know the background of.


The term Ponzi scheme derives from a hoax devised by Charles Ponzi in 1920 in which investors were guaranteed to double their investment in 90 days.

In its basic form the operation works, in that old investors are issued dividends drawn from the influx of funds from new investors—while most of the money winds up in the hands of the perpetrator of the scam. Theoretically, as long as investors do not demand the return of their principal investments all at the same time, this ‘pyramid’ scheme can go on indefinitely.

http://en.wikipedia.org/wiki/Charles_Ponzi

Madoff Was A Piker -- America's Big Banks Are a Far Larger Fraudulent Ponzi Scheme
(Note, however, that the article’s subtitle is technically redundant—because a Ponzi scheme is fraudulent by definition.) http://www.alternet.org/story/135161/


Do you have PONZI SCHEMEs in your country?