Page "Ponzi scheme" Paragraph 3

The scheme is named after Charles Ponzi, who became notorious for using the technique in 1920.

Ponzi did not invent the scheme ( for example, Charles Dickens ' 1844 novel Martin Chuzzlewitt and 1857 novel Little Dorrit each described such a scheme ), but his operation took in so much money that it was the first to become known throughout the United States.

Ponzi's original scheme was based on the arbitrage of international reply coupons for postage stamps ; however, he soon diverted investors ' money to make payments to earlier investors and himself.