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what is a PONZI scheme?

dinaren · 15 · 2563


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on: Aug 15, 2009, 06:15 PM
is there any more definition in simpler or layman's terms aside from this one?
can somebody(anybody) explain further?

A Ponzi scheme is a fraudulent investment operation that pays returns to separate investors from their own money or money paid by subsequent investors, rather than from any actual profit earned. The Ponzi scheme usually offers returns that other investments cannot guarantee in order to entice new investors, in the form of short-term returns that are either abnormally high or unusually consistent. The perpetuation of the returns that a Ponzi scheme advertises and pays requires an ever-increasing flow of money from investors in order to keep the scheme going.

The system is destined to collapse because the earnings, if any, are less than the payments. Usually, the scheme is interrupted by legal authorities before it collapses because a Ponzi scheme is suspected or because the promoter is selling unregistered securities. As more investors become involved, the likelihood of the scheme coming to the attention of authorities increases.
« Last Edit: Aug 15, 2009, 06:20 PM by dinaren »


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Reply #1 on: Aug 15, 2009, 08:14 PM
a Ponzi or "pyramid" scheme, a fraudulent investment operation that involved paying abnormally high, short-term returns to investors out of the money raised from new investors, rather than from profits generated by any real business


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Reply #2 on: Aug 15, 2009, 08:18 PM
a very good example is PNBB (by Legacy) in the Philippines, worse they utilized some rural banks to join the empire of this grand Ponzi scheme.
The PNBB offered double your money in three years, actually they entice investors to join but the interests are actually just from other new investors.
Rural banks are the same, offered 20% interests, Some banks had grand bzns scheme to show but really non-existent, some did but was not as successful resorting to enticing unsuspecting depositors to deposit with some backup from the gov"t (PDIC), to make their so called deposits stronger and people will have confidence in depositing.
I am a victim of this (I am not proud of this) and being very honest to you
gullible and naive to this type of investments. I am going to lose some big amount because of my naivete.
I believe this is a big lesson for me. i can only blame myself for researching some investment vehicles that will suit my taste and help out my family to be financially independent.
My motto nowadays "fool me once, shame on you, fool me twice, shame on me"
Live and learn from your mistakes. I will need to work 2 more years to recoup my losses if ever.
« Last Edit: Aug 30, 2012, 03:21 PM by FutureGizmo »


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Reply #3 on: Aug 15, 2009, 08:36 PM
real life examples: Multitel, Tibayan, Royal Manchester Five, SMFund scam, yung Legacy, even the Performance Foreign Exchange,... tsk tsk, daming OFW money ang nasunog lang dito as well locals who were blinded by double your money schemes, and in the case of Peformance, high society and high-profile people.. which illustrates that greed and stupidity breaks class boundaries..   if the victims are really going to get their money back, just look at Multitel.. those scammers are using the investors' money to hire power lawyers against the very same investors, talking about frying them in their own fat.

i've read somewhere though that pyramid scams and bank failures are in a way part of the economic system to combat inflation by siphoning off excess money supply, the resulting collapse is actually a resetting to the previous status..

 pakicorrect nyo na lang kung mali itong nabasa ko o ang pagkakaintindi ko.

 goodluck to all pyramid scam victims.
« Last Edit: Aug 30, 2012, 03:24 PM by FutureGizmo »


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Reply #4 on: Aug 15, 2009, 08:43 PM
ahh so illegal talaga ang gumamit ng investors' money to pay off another investors no. But how will the new investors know that the money they are receiving is the money that other investors paid? Dapat talaga transparent ang business as to their gains and losses.

Thanks for insights @bp22, mlangseth, intelinvest. Very helpful. Frankly i dont know how will i handle if i am victimized by this kind of scheme.


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Reply #5 on: Aug 15, 2009, 08:51 PM
dinaren: i guess so.. you are supposed to use the investors' money to "invest" and earn returns,  not to pay the upper-echelon investors..  pag ganun lang kasi at lahat naging "investor", sino magbabayad pag wala nang natira? ..take for example the case of Albania in 1996, in which the entire population participated in the scheme and it caused the economic collapse of the whole country, not just a section of it.


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Reply #6 on: Aug 15, 2009, 08:53 PM
Word of caution: Invest what you can only afford to lose.

You need to have a fallback position if ever, or a back-up plan..Have some reserves or emergency funds intact. Some depositors do not have so they are living like church-mouse now.
This way, even if you lose, you can still recoup.
Be mature enough to accept the consequences of your actions.

Tha Madoff scandal was huge: even religious institutions invested hoping for big gains for their people, which they eventually lost (Hadassah).

Read, read, read. Remember, some people are there to irritate and have negative outlook in life. Stay away from them. Do not let anybody put you down. Learn from your mistakes.
Trust me, this helps.
« Last Edit: Aug 30, 2012, 03:20 PM by FutureGizmo »


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Reply #7 on: Aug 15, 2009, 09:04 PM
@ dinaren: ha ha... stay away from people who offer too rosy and unrealistic returns .. these sales people are good in exploiting the greed level of their victims, particularly if they can detect personal/social insecurities.. you'll observe that when these people placed their money in pyramid, they became the cheerleaders of the scheme until they realize that they've become victims. . if you adopt that method and divide your money in Multitel, Tibayan and other pyramid schemes which co-existed during their'll be left with zero..

aral ka lang, and be financially literate.. and do the investing yourself, be patient and enjoy your little gains.. good luck..

« Last Edit: Aug 30, 2012, 03:22 PM by FutureGizmo »


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Reply #8 on: Aug 15, 2009, 10:15 PM
^ +1 million
i cant agree more.  :cool2:


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Reply #9 on: Aug 15, 2009, 11:07 PM
Ponzi is a pyramid made out of egypt :hihi:


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Reply #10 on: Aug 16, 2009, 12:28 AM
Many ponzi will start out as a legitimate business. Then eventually they will start to miss their financial obligations to their clients.

Diversify, and diversify. This is my principle in investing.
« Last Edit: Aug 30, 2012, 03:21 PM by FutureGizmo »


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Reply #11 on: Aug 16, 2009, 03:27 AM
Why is this in the Classifieds section? Moving thread to The Lounge.

Additional reading about Ponzi schemes, from the PMT blog: What is a Ponzi scam? Why is it called Ponzi?


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Reply #12 on: Aug 16, 2009, 04:03 AM
as you wish mod.

nice read indeed. thanks.  :hello:


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Reply #13 on: Aug 29, 2012, 06:06 PM
buhayin ko lang to.
pansin ko, ang dami daming sumusulpot na online investing/referral programs na similar sa mga ponzi schemes or hindi nga agad mahahalata pero pyramiding pa rin.
yung facebook wall ko napupuno na ng mga iba't ibang posts na kumikita sila, etc. etc. tapos kung susundan ko naman ang link para i-check. very enticing kasi they're too good to be true and easy money. pero di man lang napproof-read ang nasa website, may mga wrong grammar.
kawawa din ang mga sumasali na di naman kumikita since yung mga nasa taas lang ang nag-eearn :(


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Reply #14 on: Aug 30, 2012, 04:14 AM
 :D Ponzi Scheme : "Robbing Peter to pay Paul"


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