First Ponzi scheme

A “Ponzi” scheme is a form of fraudulent investment, where large returns are promised but, instead of being paid for by the profit on real investments, they are paid for from subsequent investors enticed by the high interest rates offered.  They are reliant on an ever-increasing flow of money from new investors and will ultimately fail because the earnings are less than the payments – the most recent investors losing their money.  They are called “Ponzi” schemes after Charles Ponzi, an Italian who moved to America and, in 1920, became notorious across the world for establishing such a scheme that ultimately failed owing millions to its investors.  Hence, although he did not invent the scam, he nonetheless may rightly be described as creator of the first “Ponzi” scheme as, subsequently, all such schemes use his name to describe them.