* 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

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.

Ponzi was released on bail as he appealed the state conviction, and fled to the Springfield neighborhood of Jacksonville, Florida and launched the Charpon Land Syndicate (" Charpon " is an amalgam of his name ), offering investors in September 1925 tiny tracts of land, some under water, and promising 200 % returns in 60 days.

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

When a Ponzi scheme is not stopped by the authorities, it sooner or later falls apart for one of the following reasons:

* 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.

* An economic bubble: A bubble is similar to a Ponzi scheme in that one participant gets paid by contributions from a subsequent participant ( until inevitable collapse ).

As with the Ponzi scheme, the price exceeds the intrinsic value of the item, but unlike the Ponzi scheme, there is no single person misrepresenting the intrinsic value.

* What is a Ponzi scheme?

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.

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.

The fraudulent dealings ( similar to a Ponzi scheme ) of Mr Merdle who is Edmund Sparkler's stepfather leads to the collapse of Merdle's bank after his suicide, taking with it the savings of both the Dorrits and Arthur Clenham, who is now himself imprisoned in the Marshalsea.

* Madea's Witness Protection centers around Madea and her brother Joe ( both played by Tyler Perry, himself ) dealing with a wealthy white family living in their home, when the nerdy patriarch, George Needleman ( Eugene Levy ) has to enter the witness protection program after being framed for a Ponzi scheme and a Mafia family is out to kill him.

White-collar crime is similar to corporate crime as white-collar employees are more likely to commit fraud, bribery, Ponzi schemes, insider trading, embezzlement, cybercrime, copyright infringement, money laundering, identity theft, and forgery.

The collapse of the Ponzi schemes towards the end of 1996, into which it is alleged that Albanians invested $ 1 billion worth of life savings from 1994, recapped the crisis.

But this is not quite correct since in a Ponzi Scheme early investors are paid dividends from their own money or that of subsequent investors.

For example, a hedge fund can degenerate into a Ponzi scheme if it unexpectedly loses money ( or simply fails to legitimately earn the returns promised and / or thought to be expected ) and the promoters, instead of admitting their failure to meet expectations, fabricate false returns and, if necessary, produce fraudulent audit reports.

The combination substantially delayed effective governmental action, thereby substantially increasing the losses when the fraudulent Ponzi schemes finally collapsed and were exposed.

This allows more fraudulent and unsound credit to be extended, ( Ponzi credit ), inflating the bubble and deepening the ensuing crash.

* 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.

Allen Stanford used fraudulent CDs with high rates to lure people into his Ponzi 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.

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.

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

# 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 ).

** 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.

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

A ' Ponzi ' or pyramid scheme typically involves an investment offer which promises to provide an abnormally higher rate of return – for example, a 30 per cent return on and investment might be claimed when a more realistic return would be five to ten per cent.

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

* 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

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.