Ponzi scheme

British  

/ ˈpɒnzɪ /

noun

1. a fraudulent investment operation that pays quick returns to initial contributors using money from subsequent contributors rather than profit

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Etymology

Origin of Ponzi scheme

After Charles Ponzi , who famously perpetrated such a scheme in the United States of America in the early 20th century

Example Sentences

Philip Wu, a Chicago-based enrolled agent with the IRS who prepares taxes for clients, tells of a client who was victimized by a Ponzi scheme and lost a bundle.

From MarketWatch • Jun. 8, 2026

Now, amid suits and countersuits among the lender bank, investors, a bankruptcy trustee and McClain’s family, details of the alleged Ponzi scheme are coming out.

From The Wall Street Journal • Jun. 7, 2026

However, Bernie Madoff was a fiduciary, and he violated the trust of his clients in a multibillion-dollar Ponzi scheme.

From MarketWatch • Mar. 30, 2026

Last September, the Securities and Exchange Commission filed a civil lawsuit against Lopez and his partners, accusing them of running a Ponzi scheme, misleading investors and misappropriating $16.1 million.

From The Wall Street Journal • Feb. 10, 2026

They had the essential feature of a Ponzi scheme: To maintain the fiction that they were profitable enterprises, they needed more and more capital to create more and more subprime loans.

From "The Big Short" by Michael Lewis