Ponzi Scheme

Named after Charles Ponzi whom developed the largest investment scheme. This took place around the 1920's in the United States. The scheme works as follows: The person or company perpetrating the scheme usually pays out a very high rate of return to entice investors. They use the investment money to pay back investors. To keep the scheme going they need to bring in new investors and investment dollars. So in essence they have to rob Peter to pay Paul. When the collapse happens they usually put the blame on government regulators.