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Named after Italian Charles Ponzi, a Ponzi scheme is a fraudulent investment operation that promises unusually high returns to investors from money paid in by subsequent investors, rather from revenues of a real business.

Ponzi duped thousands in New England in the 1920s by promising them a 40-percent return in 90 days.

Investors flocked to Ponzi, who got as much as $1 million in three hours in 1921. Though paying off a few early investors made the scheme appear legitimate, investigation later found that Ponzi never had anything to offer.

Today, the Ponzi scheme continues to work on this “rob-Peter-to-pay-Paul” principle. Inquirer Research

Source: Inquirer Archives