Primary navigation:

QFINANCE Quick Links
QFINANCE Topics
QFINANCE Reference
Add the QFINANCE search widget to your website

Home > QFINANCE Dictionary > Definition of Ponzi scheme

Definition of

Ponzi scheme

Fraud

banking fraud a fraudulent pyramid selling activity that offers investors high returns which are paid directly from the money deposited by new investors. When new deposits cannot match payments, the organization fails. The fraud is named after Charles Ponzi, who first set up such a scheme in the United States in 1920.

Recommended Further Reading (Term count)
  • Nothing but Painful Choices Ahead as the Global Debt Supercycle Ends
    by John Mauldin
    John Mauldin is president of Millennium Wave Investments and is a renowned financial expert, a many-times New York Times best-selling author, and an online commentator. His weekly e-newsletter, Thoughts from the Frontline, was one of the first publications to provide investors with free, unbiased information and guidance. Today it is one of the most widely distributed investment newsletters in the world, with a subscriber base of more than one...
  • Prophet of Instability
    by David Smith
    This article was first published in Quantum magazine.When, in December 2008, Bernie Madoff confessed to his sons that there was “absolutely nothing” left in his massive investment fund and that it had been “one big lie” and “a giant Ponzi scheme” from the start, the thoughts of many people turned to previous scandals revealed by a sudden change in the financial weather.In Madoff’s case, the exposure of the scandal was attributed to the sudden...
  • Carrying Out Due Diligence on Hedge Funds
    by Amarendra Swarup
    Hedge funds have often been cited as valuable additions to any institutional portfolio, thanks to their typically uncorrelated returns to traditional asset classes over the long term, and superior risk-adjusted returns. However, they are also a complex and volatile asset class, and since their ascent onto the investment podium, both institutional and private investors have found themselves burned at regular intervals by embarrassing and costly...

Definitions of ’Ponzi scheme’ and meaning of ’Ponzi scheme’ are from the book publication, QFINANCE – The Ultimate Resource, © 2009 Bloomsbury Information Ltd. Find definitions for ’Ponzi scheme’ and other financial terms with our online QFINANCE Financial Dictionary.

Back to top