Basically, it's a pyramid scheme: rob Peter to pay Paul. It is named after a man named Charles Ponzi who was born March 3, 1882 and died January 18, 1949.Ponzi was an Italian immigrant to the United States who became one of the greatest swindlers in American history. His aliases include Charles Ponei, Charles P. Bianchi, Carl and Carlo. The term "Ponzi scheme" is a widely known description of any scam that relies on a "pyramid" of "investors" who contribute money to a fraudulent program. He promised clients a 50% profit within 45 days, or 100% profit within 90 days, by buying discounted postal reply coupons in other countries and redeem them at a higher face value in the United States as a form of arbitrage.
[The simultaneous purchase and sale of the same securities or commodities in different markets to profit from unequal prices.]
Ponzi was probably inspired by the scheme of William Miller, a Brooklyn bookkeeper who in 1899 used the same pyramid scheme to take in $1 million.
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