Ponzi scheme: What does that mean?

Many times you may have read or heard the phrase Ponzi scheme in connection with an investment and wondered where the name originated. Well, thanks to Mark Knutson, you can read all about it on the Charles K. Ponzi Website. In short, Ponzi was an Italian immigrant who, in Boston in the 1920s, promised investors outrageous returns on their money in a very short time. What he really did was use money put in by later investors to pay back early investors, of course taking a cut for himself, until the scheme collapsed under its own weight (that is, there were too many ‘later’ investors and not enough money to pay them their reward). Further, the local authorities couldn’t understand where his investment gains were coming from and, auditing him, uncovered the truth. Another name for this is the pyramid scheme and, more recently, multi-level marketing. [a few hours later…] Came across another interesting article about MLM

Thanks to the Captain of the USS Clueless for the referral.