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A fraudulent investment scheme that promises high returns which are derived from an inflow of new investors' funds rather than from sound investments. The scheme collapses when there are not enough new investors to pay the old investors. Also known as a Pyramid Scheme.
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Ponzi scheme UK US noun [C] (also pyramid scheme)
► FINANCE a way of deceiving investors in which money that a company receives from new customers for investment is not invested for them, but is used instead to pay interest that is owed to existing customers: »
He used the investors' retirement savings to conduct a Ponzi scheme.
Financial and business terms. 2012.