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.

Carlo Pietro Giovanni Guglielmo Tebaldo Ponzi, ( March 3, 1882 – January 18, 1949 ), commonly known as Charles Ponzi, was an Italian businessman and con artist in the U. S. and Canada.

In reality, Ponzi was paying early investors using the investments of later investors.

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.

He was born Carlo Pietro Giovanni Guglielmo Tebaldo Ponzi in Lugo in 1882.

As Ponzi was penniless, this proved to be very difficult.

Confronted by police who had taken note of his large expenditures just after the forged check was cashed, Ponzi held out his hands wrist up and said " I'm guilty.

It was another prisoner who became a true role model to Ponzi: Charles W. Morse.

Ponzi was unable to sell this idea to businesses, and his company failed soon after.

Ponzi claimed that the net profit on these transactions, after expenses and exchange rates, was in excess of 400 %.

A frenzy was building, and Ponzi began to hire agents to take in money from all over New England and New Jersey.

This was the only way Ponzi had to pay off those investors, as he made no effort to generate legitimate profits.

When a Boston financial writer suggested there was no way Ponzi could legally deliver such high returns in a short period of time, Ponzi sued for libel and won $ 500, 000 in damages.

The lawsuit was unsuccessful, but it did start people asking how Ponzi could have gone from being penniless to being a millionaire in so short a time.

At that time, Ponzi was making $ 250, 000 a day.

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.

Joseph Daniels, a Boston furniture dealer who had given Ponzi furniture which he could not afford to pay for, sued Ponzi to cash in on the gold rush.

Morze thought that KeyServ's Sears business would give ZZZZ Best enough cash to end the Ponzi scheme sooner than planned.

Charles Ponzi promised clients a 50 % profit within 45 days, or 100 % profit within 90 days, by buying discounted postal reply coupons in other countries and redeeming them at face value in the United States as a form of arbitrage.

Ponzi stayed in Montreal and, for some time, lived at Zarossi's house helping the man's abandoned family, while planning to return to the United States and start over.

The next business day after this article was published, Ponzi arrived at his office to find thousands of Bostonians waiting to give him their money.

The article claimed that while Ponzi claimed $ 7 million in liquid funds, he was actually at least $ 2 million in debt.

On the same day, Ponzi received a preview of Pride's audit, which revealed Ponzi was at least $ 7 million in debt.

Ponzi was found guilty at a third trial, and was sentenced to an additional seven to nine years in prison as " a common and notorious thief.

Supported by his last and only friend who spoke English and had notions of Italian, the barber Francisco Nonato Nunes, was how Ponzi granted one last interview to an American reporter, telling him, " Even if they never got anything for it, it was cheap at that price.

After infiltrating a Ponzi ( Pyramid ) Scheme meeting at the Marlborough Hotel in Winnipeg, Warren produced a three-part series for The Winnipeg Tribune which resulted in the very first legislation against such practises in North America -- for which he was later honored by the University of Mississippi journalism department.

* CNBC's American Greed program, narrated by Stacy Keach Jr., describes, in Episode # 18, " Lou Pearlman: Boy Band Bandit ," the massive fraud and Ponzi scheme, victim outrage at the federal offer to reduce Pearlman's sentence, and his proposed " Jailhouse Rock " ( gag ) reality series, and it also discusses the issue of sex with underage boys.

Though Ponzi schemes have existed since at least the early 1900s, the rise of digital payment systems has made it much easier for operators of such websites to accept payments from people worldwide .< ref >

A Ponzi schemer, convicted felon and Miami booster, Nevin Shapiro, claimed he used investor funds to finance donations to the University of Miami's athletic program and gave an estimated $ 2 million in illegal benefits to at least 72 current or former football and basketball players and coaches from 2002 – 2010.

Barron observed that though Ponzi was offering fantastic returns on investments, Ponzi himself was not investing with his own company.

Kreuger's financial empire was described by one biographer as a Ponzi scheme, based on the supposedly fantastic profitability of Kreuger's match monopolies.

* 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 ' 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.

A sustained higher-than-economy growth rate over the years usually indicates a highly profitable company, but can also indicate a scam, especially if the growth is a flat percentage no matter how the rest of the economy fluctuates ( as was the case for several years for returns in Bernie Madoff's Ponzi scheme ).

He later described Ponzi as a " financial idiot " who did not seem to know how to add.

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.

In May 2010 Simon revealed she had been one of the several celebrities who fell victims to financial advisor Kenneth I. Starr, now a prison inmate, whose Ponzi scheme lured her into ' investing ' millions of dollars with him, which she lost.

Stock promotions, Ponzi schemes, structured asset destruction through inflation, asset stripping through mergers and acquisitions, dispossession of assets ( raiding of pension funds and their decimation by stock and corporate collapses ) by credit and stock manipulations, are, according to Harvey, central features of the post-1970s capitalist financial system.

* MMM ( Ponzi scheme ), a Russian company, active from 1989 to 1994, best known for perpetrating a large financial Ponzi scheme

On March 28, 1996, the SEC filed a civil action against The Bennett Funding Group, Inc., its chief financial officer, Patrick R. Bennett, and other companies Bennett controlled, in connection with a massive Ponzi scheme.

The end credits are accompanied by a series of visual displays of the magnitudes, methods, and principal actors of various licit and illicit financial doings of the financial crisis, such as the Bernie Madoff Ponzi scheme, Goldman Sachs, AIG or the Troubled Asset Relief Program.