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A.Word.A.Day--Ponzi scheme

Pronunciation Sound Clip RealAudio

Ponzi scheme (PON-zee skeem) noun

An investment swindle in which high profits are promised from fictitious sources and early investors are paid off with funds raised from later ones.

[After Charles Ponzi (1882?-1949), Italian-born speculator who organized such a scheme (1919-1920).]

"Rice said he agreed with the SEC that Herl and May were operating a Ponzi scheme in which proceeds from newly sold notes are used to pay interest on older notes." Jim Bohman, Limits set on USA Financial, Dayton Daily News, Feb 4, 1999.

If something sounds too good to be true, it probably is. A Mr. Ponzi offered to double his investors' money in a very short time. Behind his promise of grandiose returns there was no engine of industry to harness human potential and generate revenue. It was all a facade, using the money of new investors to pay off the previous ones. Soon the bubble burst, and with that Ponzi's name was forever etched in contemporary parlance as an eponym for such schemes. (Then again, who knows... he may have been ahead of his time and dealing in Internet stocks :-). At any rate, in this week's AWAD we'll invest our time in more eponyms from fact as well as from fiction. -Anu Garg


A child on the farm sees a plane fly overhead and dreams of a faraway place. A traveler on the plane sees the farmhouse and thinks of home. -Carl Burns

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