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Ponzi scheme

/ ˈpɒnzɪ /

noun

  1. a fraudulent investment operation that pays quick returns to initial contributors using money from subsequent contributors rather than profit
“Collins English Dictionary — Complete & Unabridged” 2012 Digital Edition © William Collins Sons & Co. Ltd. 1979, 1986 © HarperCollins Publishers 1998, 2000, 2003, 2005, 2006, 2007, 2009, 2012


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Word History and Origins

Origin of Ponzi scheme1

After Charles Ponzi , who famously perpetrated such a scheme in the United States of America in the early 20th century
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Example Sentences

He would explain to people that assume Social Security is a “Ponzi scheme,” pointing out that “these are real dollars that get paid in every year and real dollars that get paid out. It is more akin to an insurance company where premiums are collected and benefits are paid out.”

From Salon

Last year, the bank agreed to pay $1.2 billion to settle a lawsuit accusing it of involvement in a $7-billion Ponzi scheme orchestrated by conman Allen Stanford, who is now in prison.

What clients, online sleuths and ultimately law enforcement found was essentially a Ponzi scheme, prosecutors said.

The change: In a book he co-wrote in 2000, “The America We Deserve,” Trump called Social Security a “Ponzi scheme,” and suggested raising the age for full retirement to 70 and privatizing the system.

Favata used the money from the scam’s new investors to pay monthly returns to clients who had invested earlier, a structure known as a Ponzi scheme.

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