Ponzi schemes are hot and even it’s illegal they always will be hot.
if you go to some online forums on how to make money online you will see members posting threads promoting ponzi schemes and even the so called hyips are most of the time a ponzi scheme.
No matter what they have told you the creator of a ponzi scheme doesn’t care about your profits. Most people are running ponzi schemes to make some quick bucks from theirself.
I’m sure you have already seen high yield investment programmes where they promise you that they are a team of expert traders making five percent daily or even more. And the fact is that some people actually do believe, even the programme has no proven track record, that their money is traded as it should be. If you see some posting on a forum “earn money fast without doing any work” than you could say almost sure he/she must be promoting a ponzi scheme.
What exactly is a ponzi scheme
Ponzi schemes or pyramid schemes has nothing to do with investments, business or sales. Simply because they don’t trade your money or they don’t sell you anything. The fact is that a ponzi scheme uses the money of new investors to pay out old investors. Some ponzi schemes are surviving a few weeks and some of them even a few months. But this is for sure they all go die after some time. Why? Because mathematically it’s impossible to find new investors.
Or sometimes the legal authorities find out the ponzi scheme and close it.
Charles ponzi: The godfather of ponzi schemes
Charles Ponzi was not the first who created a ponzi schemes but actually he was one of the first people that created a fraud scheme on such a large base. In 1903 Charles Ponzi emigrated from Italy to the United states. He has worked on a post office and studied at the university of Rome, although studied is not a good word for Charles it was more a vacation.
Without almost any money he arrived at the United States and did some jobs there. Four years later he moved to Montreal where he worked in the Banco Zarossi. Zarossi the owner gave a six percent interest on bank accounts. But Ponzi discovered that Zarossi used the money from new client to pay out old client. The scheme failed and Zarossi escaped to Mexico. Ponzi stayed even in prison for fraud for some years but in 1911 he was released. After the war he started his scheme based on postal reply coupons and promised his clients a return of their money in a short time frame of 90 days. His own company called the Securities Exchange Company was a fact. He had a lot of agent that were working for him and in 1920 he had accumulated millions of dollars, a very large sum of money for this time. I think it is no surprise to you that Charles Ponzi lived very luxuriously.
But people were asking questions about his company after an unsuccessful lawsuit.
The Boston Post wrote some negative articles about his company. But however the newspaper offered Charles Ponzi five thousand dollars for his story and it became a headline. However a few days later federal agent closed down his company. On august 13 1920 he was arrested but however some people protested strongly, no wonder at all some of them had invested millions of dollars. He went to jail and stayed there to 1934 after he was released he was deported to Italy. Ponzi spend the last years of his live in poverty and in 1948 he died.