What do you know about a Ponzi Scam?
Charles Ponzi was an Italian-born swindler who eventually made his way into the states in November of 1903. Charles Ponzi is one of the biggest scam artists to have ever touched American soil. Not surprisingly, the Ponzi scam is named after Charles Ponzi. A Ponzi scam is based on the premise of gathering money from several investors and promising them a large profit in an unrealistically short amount of time. To gain their trust, the conman behind the Ponzi scam will pony up the promised amount and the investor will reinvest because of the initial favorable results.
A Ponzi scam can continue for years without detection and grows each time a new investor jumps on the unknown Ponzi scam band wagon. Eventually, the conman behind the Ponzi scam will run with all of the money or the entire Ponzi scam will unravel and the conman behind the Ponzi scam will be thrown in jail for fraud.
Example of a Ponzi Scam…
Jim decides to run a Ponzi scam to gain millions of dollars and then run with the money after a few years. Jim promises his clients a 55% profit on their initial investment within 30 days. Clearly, this will be nearly impossible to accomplish, but it’s the premise of a Ponzi scam. Jim pays his clients the promised amount. His clients are pleased, yet unsuspecting of the underlying Ponzi scam that they reinvest with triple the initial investment. Over time, Jim’s client base grows. He continues to pay his clients the promised payout with money from new investors. Eventually, Jim gets caught in his Ponzi scam because his colleagues grew suspicious. Jim goes to jail and his clients are out of money all because of his reckless Ponzi scam.
