Ponzi scheme
Noun
Meaning
Ponzi scheme (plural Ponzi schemes)
A fraudulent scheme where earlier investors are paid with the money taken from new investors, giving the impression that the scheme is a viable investment.
Synonym: Ponzi scam
Coordinate term: pyramid scheme
Examples
An advancing price meant a continued infusion of investor capital on which debt-ridden Enron in large part subsisted (much like a financial "pyramid" or " Ponzi scheme ").
Chicago Title, which so far has denied any wrongdoing in the Champion-Cain Ponzi scheme, counters in its status report that the company continues to pursue mediation talks in still pending lawsuits, although they have yet to yield settlements.
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.
But year-earlier results reflected a charge for investments linked to what prosecutors called a Ponzi scheme at a solar company, which Berkshire did not know about.
In all, she calculates there were 491 investors in the Ponzi scheme, of which an estimated 349 lost a net $183 million.
Among JP Morgan’s other notable former clients is Bernie Madoff – the fraudster behind the biggest Ponzi scheme in history.