PONZI

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Dr. Goodword
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PONZI

Postby Dr. Goodword » Sat Dec 13, 2008 12:26 am

• Ponzi •

Pronunciation: pahn-zee • Hear it!

Part of Speech: Adjective, Proper noun

Meaning: A type of fraud in which money is taken from investors but not invested; rather, large dividends are paid to earlier (would-be) investors with funds taken in from later (would-be) investors. The large "dividends" attract more and more investment capital until the manager absconds with the last "dividends" and remaining capital to a country having no extradition agreement with the country in which the fraud was perpetrated.

Notes: The US Securities and Exchange Commission recently charged Bernard Madoff with conducting a multibillion dollar Ponzi scheme. Mr. Madoff apparently did not understand the "absconding" part of the definition of today's Good Word.

In Play: A pyramid scheme differs from a Ponzi scheme in that participants in a pyramid scheme pay a fixed amount to someone above them in a hierarchy or "pyramid". The recipient passes most of that amount to someone above him or her, keeping an agreed-upon percentage. As the number of participants at the bottom of the pyramid increases, the point is eventually reached where there isn't sufficient money to reach the top and the scheme then usually collapses.

Word History: The eponym of today's Good Word was an Italian criminal by the name of Carlo "Charles" Ponzi (1882-1949), who discovered he could buy US Postal Reply Coupons for return postage in Italy and redeem them for stamps worth 200% more in the US. Friends who wanted to get in on the profit were offered a 50% return on their investment in 90 days. Soon, thousands of people were lining up at his 27 School Street office in Boston to invest. By 1920 Ponzi was taking in a million dollars a week, paying off earlier investors with money from later ones. Then it occurred to Ponzi that the postal coupons were superfluous, so he simply dropped them altogether but continued to rake in millions. When he could no longer pay any "dividends", he absconded to Florida, then to Texas, where he was finally arrested and deported.
• The Good Dr. Goodword

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Slava
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Postby Slava » Sun Dec 14, 2008 10:13 pm

As a philatelist, I'm almost proud of this one.
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Stargzer
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Postby Stargzer » Mon Dec 15, 2008 5:49 pm

Nah! As far as the Post Office goes, my favorite is the legend of the guy, many, many years ago, who wanted to build a house, but lived too far from civilization to have the bricks delivered by truck (or was it by mule team?).

Legend has it that he mailed them to himself, brick by brick, and let the Postal Service absorb the cost of delivery to the boondocks under the rates available at the time.

I'm sure it's an Urban Legend, but now I wonder if the Ancient Egyptians has a Postal Service when they were building real pyramids? :?:
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Cacasenno
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Postby Cacasenno » Mon Dec 15, 2008 6:00 pm

As far as the Post Office goes, my I wonder if the Ancient Egyptians has a Postal Service when they were building real pyramids? :?:

That would explain the wretched conditions of all these skeletons found around the pyramids: they were all delivery postmen. :wink:


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