Ponzi Scheme

A type of investment fraud presented as a legitimate service promising high returns. The organiser personally recruits investors, unlike a pyramid scheme where participants must attract new members. In both cases, the collected funds are not truly invested but are used to pay "profits" to earlier investors. The scheme is named after the Italian Charles Ponzi, who, in the early 20th century in the United States, defrauded hundreds of victims over the course of about a year.