What Is a Ponzi Scheme?

Nationwide White Collar Criminal Defense Attorney Explains

Where did the phrase “Ponzi scheme” come from? In this video, Florida white-collar criminal defense attorney Curtis Miner explains the origins of the Ponzi scheme, explains how a Ponzi scheme works and details the differences in how the term is used in modern white collar crimes versus its original intent.

If you have questions regarding a white-collar legal claim, you can reach our Florida attorneys at (305) 476-7400 or you can fill out our online case review form. Our law firm has represented many Fortune 500 companies and their executives in criminal trials as well as government investigations.

Video Transcription:

The term Ponzi scheme actually originates with an individual named Charles Ponzi, but the way it’s used today is generally to define any investment scheme where the bad guys, the wrongdoers, are soliciting people to invest with promises of inflated returns, very high returns or promises about the safety and security of their investment and they’re taking in investor money. And instead of putting that money into the investment that they promised, whether it was real estate or gold bars or stocks, they’re using it to buy fancy cars, fancy houses, yachts, travel the world. They’re doing all the things that bad guys do with their ill-gotten gains. And the way that they get new investors in is that they take in new investor money and they pay some of that new investor money to the old investors to keep them happy, they pay them interest or part of the returns. Never the full amount, of course, because then the scheme wouldn’t work. And the way a Ponzi scheme is able to keep rolling is you keep using some of that new investor money to hold off the old investors to try to keep them happy and you keep it going as long as you can. That’s sort of the generic definition of a Ponzi scheme.

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