Named after Italian businessman Charles Ponzi, one of masterminds of a popular scam in the 1920’s.
It is a type of fraud where investors are lured with the promise of quick and large returns by making them believe in a non- existent business. The money paid by new investors is used to pay back the money to older investors and so on without any real growth or profit.
Some of the identifying characteristics of a ponzi scheme are- high investment returns with little or no risk, overly consistent returns, unlicensed sellers, unregistered investments, secretive or complex strategies, issues with paperwork and difficulty in receiving payments.