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Ponzi-schemes

Ponzi-schemes comes after Charles Ponzi who in 1920, ran a scam in the U.S. promising a 50% rate of return in 45 days for a convoluted investment involving international mail coupons. Unlike pyramid schemes which involve a hierarchical structure, Ponzi-schemes are promoted as investment schemes that promise to pay relatively high rates of returns for fixed term investments.  They are fraudulent investment plans in which the money is not invested at all. Instead, every new investment is used to pay off earlier investors.  Such payouts build credibility for Ponzi-schemes to attract more and more investors.