April 6, 2024

Of 200 million dollars invested, Charles Ponzi fell 120 million dollars short while repaying the investors. It was a huge lesson for the investors. But the 100-year-old scheme still continues to adversely affect the lives of those who do not learn

Mohammad Rezaul Karim/Banker, Rucsar Jabin/Academic

01 April, 2022, 11:00 am

Last modified: 01 April, 2022, 11:25 am

Illustration/TBS

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Illustration/TBS

During the last few decades, uncertain economic conditions paved the way for various fraudulent financial schemes. One such Fraud scheme is the Ponzi scheme. The Ponzi scheme was named after Charles Ponzi, who in 1920 used a technique known as the ‘confidence trick’. He guaranteed investors that their investment would double in 90 days after purchasing foreign postal coupons. 

In the beginning, the investment appeared successful since he had paid out the promised returns to all the early investors. When investors began pouring money into Charles Ponzi’s scheme, his debts started growing exponentially. 

Doubling everyone’s money would make his debts grow substantially because he would owe even more. Although this did not matter to Charles Ponzi as long as all the investors did not demand their funds at once. However, when the news was published…

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