Ponzi Scheme

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Ponzi Scheme refers to a dubious investment system where the owner of the instrument pays investor returns from new investments by incoming investors instead of paying from actual profits made off a legitimate product. New Investors are usually enticed by offering higher interest returns than other investments. Those that come in early into the scheme may make some or all their money back depending on how long it takes for the scheme to collapse.

Some Ponzi schemes begin as legitimate businesses only to turn Ponzi after failing to achieve expected returns and then continuing to pay returns based on new members coming in.

Ponzi Schemes in Zimbabwe

  • MMM Global Zimbabwe which became popular in Zimbabwe in 2016 prompting the Reserve bank of Zimbabwe to issue a warning to Zimbabweans against joining it.[1]

Source of Ponzi Name

The source of the name Ponzi is from Charles Ponzi, an Italian businessman and con man who operated this scheme extensively in the U.S. and Canada taking in so much money that it was the first to become known countrywide. 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.


References

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