* A pyramid scheme is a form of fraud similar in some ways to a Ponzi scheme, relying as it does on a mistaken belief in a nonexistent financial reality, including the hope of an extremely high rate of return.

** A Ponzi scheme claims to rely on some esoteric investment approach and often attracts well-to-do investors ; whereas pyramid schemes explicitly claim that new money will be the source of payout for the initial investments.

Two overt examples of pyramid schemes are a Chain Letter and a Ponzi Scheme, while a stock market bubble, particularly fueled by lines of credit ( margin accounts ) is a more subtle example.

The Kyiv Post reported on 26 November 2008 that American citizen Robert Fletcher ( Robert T. Fletcher III ; aka " Rob ") was arrested by the SBU ( Ukraine State Police ) after being accused by Ukrainian investors of running a Ponzi scheme and associated pyramid scam netting US $ 20 million.

* Charles Ponzi, for whom the " Ponzi scheme " is named, a scam that relies on a " pyramid " of " investors " who contribute money to a fraudulent programme.

Ponzi or pyramid schemes

* Ponzi schemes, which are similar to pyramid schemes and offer exorbitant returns on investment, are also similarly illegal in many jurisdictions.

* Caritas ( Ponzi scheme ), a pyramid investment / Ponzi scheme in the early 1990s in Cluj-Napoca, Romania

Matrix schemes are also sometimes considered similar to Ponzi or pyramid schemes.

The operation of matrix schemes varies, though they often operate similar to pyramid or Ponzi schemes.

* 2008 – Bernard Madoff is arrested and charged with securities fraud in a $ 50 billion Ponzi scheme.

In December 2008, Bernard Madoff was arrested for running a US $ 50 billion Ponzi scheme which was thought to be a hedge fund, and several feeder hedge funds, of which the largest was Fairfield Sentry, channelled money to it.

The profit that could be made by taking advantage of the differing postal rates in different countries to buy IRCs cheaply in one country and exchange them for stamps of a higher value in another country was the intended profit generator for a scheme operated by Charles Ponzi, which became the fraudulent Ponzi scheme ; in practice, the overhead on buying and selling large amounts of the very low-value IRCs precluded profitability.

Bacon and Sedgwick lost an undisclosed amount of money in the Ponzi scheme of infamous fraudulent investor Bernard Madoff.

The Wilpon family and Saul Katz recently settled the lawsuit brought against them on behalf of the victims of Bernard Madoff ’ s Ponzi scheme for $ 162 Million.

Picard had originally sought to recover $ 1 Billion from the Wilpon family and Mr. Katz, but had to settle for $ 162 Million along with the admission that neither the Wilpons nor Mr. Katz had any knowledge of the Ponzi scheme.

He is accused of funding his philanthropy, political contributions, law firm salaries, and an extravagant lifestyle with a massive 1. 2 billion dollar Ponzi scheme.

* Ponzi scheme, a scam paying investors returns from their own or others ' money rather than profits

Example: A promoter of a Ponzi scheme wants to attract web surfers to a site where he advertises his scam.

This type of scheme is now known as a " Ponzi scheme ".

Ponzi was probably inspired by the scheme of William F. Miller, a Brooklyn bookkeeper who in 1899 used the same scheme to take in $ 1 million.

Seeing an opportunity, Ponzi quit his translator's job to set his scheme in motion.

Soon afterward, Ponzi started his own company, the " Securities Exchange Company ," to promote the scheme.

On July 24, 1920, the Boston Post printed a favorable article on Ponzi and his scheme that brought in investors faster than ever.

In Italy, Ponzi jumped from scheme to scheme, but little came of them.

1910 police mugshot of Charles Ponzi, the namesake of the scheme

A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from profit earned by the individual or organization running the operation.

The Ponzi scheme usually entices new investors by offering higher returns than other investments, in the form of short-term returns that are either abnormally high or unusually consistent.

Usually, the scheme is interrupted by legal authorities before it collapses because a Ponzi scheme is suspected or because the promoter is selling unregistered securities.

A wide variety of investment vehicles or strategies, typically legitimate, have become the basis of Ponzi schemes.

Undaunted, Ponzi went to several of his friends in Boston and promised that he would double their investment in 90 days.

Ponzi's good fortune was increased by the fact that just below this favorable article, which seemed to imply that Ponzi was indeed returning 50 % return on investment after only 45 days, was a bank advertisement that stated that the bank was paying 5 % returns annually.

Ponzi schemes sometimes commence operations as legitimate investment vehicles, such as hedge funds.

# Since the scheme requires a continual stream of investments to fund higher returns, once investment slows down, the scheme collapses as the promoter starts having problems paying the promised returns ( the higher the returns, the greater the risk of the Ponzi scheme collapsing ).

This is called investigative due diligence and is becoming much more prevalent in the 21st century with the public reports of large scale Ponzi schemes and fraudulent investment vehicles such as Madoff, Stanford, Petters, Rothstein and the hundreds of others reported by the SEC and other law enforcement agencies.

Once the bubble bursts, the fall in prices causes the collapse of unsustainable investment schemes ( especially speculative and / or Ponzi investments, but not exclusively so ), which leads to a crisis of consumer ( and investor ) confidence that may result in a financial panic and / or financial crisis ; if there is monetary authority like a central bank, it may be forced to take a number of measures in order to soak up the liquidity in the financial system or risk a collapse of its currency.

However, it was actually a front to attract investment for a massive Ponzi scheme.

In 2010 he was linked to a ' Ponzi ' style investment scheme.

Over $ 450 million was bilked from church followers in the Paynes ' fraudulent investment scheme, which was billed as one of the largest Ponzi schemes in U. S. history.

A high-yield investment program ( or programme ), HYIP, is a type of Ponzi scheme, which is an investment scam that promises unsustainably high return on investment by paying previous investors with the money invested by new investors.

The naming rights controversy reemerged when details about owner Fred Wilpon's involvement in Bernard Madoff's Ponzi scheme came to light when a lawsuit was filed on behalf of victims of Madoff's investment scandal in 2011.