A Ponzi scheme (; also a Ponzi game) is a fraudulent investment operation where the operator generates returns for older investors through revenue paid by new investors, rather than from legitimate business activities. Operators of Ponzi schemes can be either individuals or corporations, and grab the attention of new investors by offering short-term returns that are either abnormally high or unusually consistent - wikipedia 
Companies that engage in Ponzi schemes focus all of their energy into attracting new clients to make investments. Ponzi schemes rely on a constant flow of new investments to continue to provide returns to older investors. When this flow runs out, the scheme falls apart.
The scheme is named after Charles Ponzi, who became notorious for using the technique in the 1920s. The idea, present in novels (for example, Charles Dickens' 1844 novel Martin Chuzzlewit and 1857 novel Little Dorrit each described such a scheme), was performed in real life by Ponzi, and became well known throughout the United States because of the huge amount of money he took in. Ponzi's original scheme was based on the arbitrage of international reply coupons for postage stamps; however, he soon diverted investors' money to make payments to earlier investors and himself.
# See also * Characteristics * Unraveling of a Ponzi scheme * Similar schemes * Society and Culture * See also * References * Further reading * External links