Indiana Securities Lawyers

Internet Security Fraud  Method For Distributing Fraudulent Messages like Ponzi Schemes

These are named after Charles Ponzi, who ran such a scheme in 1919-1920. A Ponzi scheme is an investment scheme in which returns are paid to earlier investors entirely out of money paid into the scheme by newer investors. Ponzi schemes are similar to pyramid schemes, but differ in that Ponzi schemes are operated by a central company or person, who may or may not be making other false claims about how the money is being invested and about the source of the returns. Ponzi schemes don't necessarily involve a hierarchal structure, as in a pyramid scheme; there is merely one person or company collecting money from new participants and using this money to pay off promised returns to earlier participants. Ponzi schemes are not necessarily illegal, but they are difficult to distinguish from illegal pyramid schemes. In almost every case, only a very few early investors actually benefit from them.

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