What are Ponzi Schemes

Ponzi schemes are those scam investment schemes in which return are given on the basis of money which are paid by new investors instead of earning of any profit. For example, you have been offered double return on  your every new investment. First year, one investor invested $ 50,000. You have to pay $ 100,000. In second year another investor invested $ 1,00,000. You paid $ 1,00,000 with double return to first investor from the investment money of second investor. With this, first investor will feel happy and he will tell his friends. His friends will also invest their big money in your fraudulent project. You are doing nothing. You just pay the payment with double amount if any old investor demands. All such investment schemes are called Ponzi Schemes.

First Ponzi Scheme was started by Charles Ponzi. He promised to give 100% profit within 90 days through exchange of international reply coupons (IRC).

Not just charles ponzi, but there are lots of big cheaters who have cheated the public  through these ponzi schemes. You can read all cheaters in the wikipedia's list of ponzi schemes.

Name of Investor

 Time of Investment
1 2 3 4 5
100,000 2,00,000 4,00,000 8,00,000 16,00,0000
No payment (

Collapse of the

Y - 1,00,000 2,00,000 (Payment) - -
Z - - 3,00,000 6,00,000 -
A - - - 5,00,000 10,00,000 No
payment (

Collapse of the

Actual Investment 1,00,000 3,00,000 1,00,000 6,00,000 Party is 9 - 2- 11 or disappears
Total Worth 1,00,000 3,00,000 7,00,000 19,00,000  Nil






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Accounting Education: What are Ponzi Schemes
What are Ponzi Schemes
Accounting Education
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