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January 07, 2009


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Allie Shearman

The AP Stylebook (the largest literary tool for journalists) defines Ponzi scheme as: a fraudulent investing technique that promises high rates of return with little risk to investors. In the shceme, money provided by new investors is used to pay seemingly high returns to early stage investors to suggest the enterprise is prosperous. The scheme collapses when required redeptions exceed new investments. Named for Charles Ponzi, who set up such an illegal pyramid scheme in the 1920s as a way for investors to make money through international currency transactions.


This seems to liken itself to an affinity scheme. It is my understanding that people were lined up begging him to take their money...unfortunately I think they were expecting him to invest it. He was likeable, although he generally had minions that kept him isolated from direct interaction with investors. This seems to be a good indicater that this is a financial guide to avoid, no?

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