History Main / Ponzi

* Sam Bankman-Fried (SBF) had a glowing reputation as a techbro to the point that FTX Trading became the third largest crypto exchange. However, that all came crashing down after he was accused of conning as much as $10 billion from clients to binge-spend and hide the debts of another firm he owned, triggering the equivalent of a cryptocurrency bank run. SBF tried [[NeverMyFault blaming]] his employees and hightailing to the Bahamas, but was deported back and received a 25-year prison sentence. FTX's bankruptcy indirectly led to the collapse of crypto-friendly banks such as Signature Bank, Silicon Valley Bank and Silvergate Bank in early 2023 due to a lax regulatory environment. A related trial in 2024 on allegations SBF bribed Chinese government officials in an effort to unfreeze accounts belonging to his hedge fund in Hong Kong was later dismissed.

* Sam Bankman-Fried (SBF) had a glowing reputation as a techbro to the point that FTX Trading became the third largest crypto exchange. However, that all came crashing down after he was accused of conning as much as $10 billion from clients to binge-spend and hide the debts of another firm he owned, triggering the equivalent of a cryptocurrency bank run. SBF tried [[NeverMyFault blaming]] his employees and hightailing to the Bahamas, but was deported back and received a 25-year prison sentence. FTX's bankruptcy indirectly led to the collapse of crypto-friendly banks such as Signature Bank, Silicon Valley Bank and Silvergate Bank in early 2023 due to a lax regulatory environment. SBF is also facing a related trial in 2024 on allegations he bribed Chinese government officials in an effort to unfreeze accounts belonging to his hedge fund in Hong Kong.

* Sam Bankman-Fried (SBF) had a glowing reputation as a techbro to the point that FTX Trading became the third largest crypto exchange. However, that all came crashing down after he was accused of defrauding as much as $10 billion from clients to binge-spend and hide outstanding debts of another firm he owned, triggering the equivalent of a cryptocurrency bank run. SBF tried [[NeverMyFault blaming]] his employees and hightailing to the Bahamas, but was deported back. FTX's bankruptcy indirectly led to the collapse of crypto-friendly banks such as Signature Bank, Silicon Valley Bank and Silvergate Bank in early 2023 due to a lax regulatory environment. SBF is also facing a related trial in 2024 on allegations he bribed Chinese government officials in an effort to unfreeze accounts belonging to his hedge fund in Hong Kong.

* In the Creator/CharlesStross novel ''Literature/NeptunesChildren'', interstellar colonization is compared to a Ponzi scheme: Setting up a new colony places the colony so deeply in debt that the only way to pay it off is to fund two ''new'' colonies, placing them in debt to the first...

* Sam Bankman-Fried (SBF) had a glowing reputation as a crypto bro to the point that FTX Trading became the third largest crypto exchange. However, that all came crashing down after he was accused of defrauding as much as $10 billion from clients to binge-spend and hide outstanding debts of another firm he owned, triggering the equivalent of a cryptocurrency bank run. SBF even tried hightailing to the Bahamas, but was deported back. FTX's bankruptcy indirectly led to the collapse of crypto-friendly banks such as Signature Bank, Silicon Valley Bank and Silvergate Bank in early 2023 due to a lax regulatory environment. SBF is also facing a related trial in 2024 on allegations he bribed Chinese government officials in an effort to unfreeze accounts belonging to his hedge fund in Hong Kong.

A SisterTrope to GetRichQuickScheme. Not related to a [[JustForPun Fonzie]] [[Series/HappyDays scheme]], which involves wacky hijinks for half an hour. Also has nothing to do with ''Webcomic/PonAndZi''.

* The ''WesternAnimation/TeenTitansGo'' episode "Pyramid Scheme" has Beast Boy falling for one such scheme and pulling the others into it. Robin tries to explain to them what a pyramid scheme is (a sketchy and unsustainable business model), but they think it involves actual pyramids and mummies. The main cast sans Robin all start swimming in cash for a while, but then Beast Boy [[OhCrap realizes he forgot that most of their revenue]] has to go to the boss, who happens to be an actual mummy. In huge debt after they literally ate their own profits, the mummy enslaves them into working in the hot, scorching desert much like oxen.

* [[http://archive.fortune.com/magazines/fortune/fortune_archive/1996/07/08/214344/index.htm In the 1980s]], the French bank Credit Lyonnais got into the habit of loaning money to basically every B-tier movie company in Hollywood, with Creator/CarolcoPictures, Creator/TheCannonGroup and others among their clients; they basically built things up into a giant Ponzi-esque scheme over time. It didn't matter that these companies were making bomb films and weren't able to pay off their loans; as long as Credit Lyonnais was being bribed with all sorts of stuff, they kept the money flowing via shell companies, and [[https://www.lukeford.net/profiles/profiles/moshe_diamant.htm used other shell companies to hide their financial misdeeds]]. Things got even worse when another fraudster, Italy's Giancarlo Parretti, got involved by buying Cannon. He embezzled even more money, bribed the bankers with vacations and artwork, and ultimately began pulling much the same stuff when he, with Credit Lyonnais' assistance, bought Creator/{{MGM}} in late 1990. It took about eight months for the entire thing to come crashing down around his ears; Credit Lyonnais kicked Parretti out and had him arrested, and spent the next few years attempting to sell MGM to someone (ultimately, that wound up Kirk Kerkorian, who'd already sold MGM twice before, once to UsefulNotes/TedTurner and then to Parretti). The French government also wound up bailing out the bank (who'd been involved in other financial scandals) and helped to sell off some of the assets; this included the Epic library, which consisted of many of the smaller companies indebted to Credit Lyonnais like Hemdale, Nelson and Epic itself (set up basically as a shell to purchase the assets of the failing Empire International). Creator/PolygramFilmedEntertainment bought the Epic library in 1997, but new owners Seagram's (in the process of absorbing Polygram into Creator/{{Universal}} and selling many of their assets to defray the cost of the deal) sold the Epic library (and Polygram's pre-1996 library) to MGM, bringing things full-circle.
* The U.S. Social Security system is often compared to a Ponzi or pyramid scheme by its critics. The principle is similar: workers pay into a trust fund from which retirees are paid. In other words, it's a money pipeline with a promise that, after paying into it for long enough you get to switch to the other side. Trouble is, with people living a lot longer than they did when the system was created in 1935, there's more money flowing out than in, and it doesn't help that other parts of the government love to raid the fund for their own purposes. Plus it's a sacred cow of politics, making reforms almost impossible. Projections about the program's sustainability are not good.

Most Ponzi schemes use many more than two people, and in fact depend on a constant rotation to create an illusion of wealth and payoff, and an influx of new people who haven't been scared away by the rising costs. Indeed, a common name for Ponzi schemes is "rob Peter to pay Paul", as the principle is the same -- except that today's Peter is tomorrow's Paul until this grows unsustainable. May also be referred to as a Pyramid Scheme, although technically that's a different kind of scam.[[note]] The difference being that instead of a central figure manipulating the money to keep the marks satisfied, each entrant to a Pyramid scheme is expected to recoup their own investment by recruiting other investors under them in the structure. The further up you are, the more you make, but the bottom tier will never see a profit. Multi-Level Marketing is a technically legal version of a Ponzi/Pyramid Scheme, as it hinges on selling a product to a lower salesman, but retains similar controversial practices. Depending on how many people you are expected to recruit, pyramids can quickly require more people than the entire world population. [[/note]] The largest example ever was the $64.8 ''billion'' (in pretend money, anyway) collapse of the firm of Bernie Madoff, whose operation was a classic Ponzi scheme.

Get Bob and Alice to both lend you money. Give Alice her money back, with the addition of some really good "interest" you took out of Bob's loan. Stall Bob.

Go back to Alice a little later and see whether she can steer you toward a bigger loan. Alice can. In fact, she'll do it herself. She remembers that big payoff.

Pay Bob with some interest you took out of Alice's latest loan, leaving Bob with a big smile.

Wash, rinse, repeat. Echo the dollars back and forth between these two until one of them is comfortable with a really huge loan. Pocket the money, change your name, and move to another city.

* In the Creator/ArthurHailey novel ''The Moneychangers'' this is what the seemingly powerful Sunatco corporation has turned into. The company has been suffering massive losses but hiding it with fancy bookkeeping. They keep themselves afloat by conning banks and other companies into giving them "loans" and then more loans to pay off their older debts. One example is a set of loans of $80 million to be paid off over forty years. But on the Sunatco books, that's cited as $80 million of profit. However, they're finally hitting the limit of borrowing and thus Sunatco is a house of cards ready to collapse.
** This is bad news for First Mercantile American bank who had loaned Sunatco $50 million (an astronomical sum in 1975), all of which is used up in only a few months. Thus, if Sunatco goes down, it could take FMA with it.
* In the Creator/CharlesStross novel ''Neptune's Children'', interstellar colonization is compared to a Ponzi scheme: Setting up a new colony places the colony so deeply in debt that the only way to pay it off is to fund two ''new'' colonies, placing them in debt to the first...

* In ''LightNovel/HeavyObject'' the Wendigo Vehicle Group got started when its founder leveraged a number of fake property and mineral deeds to buy out a company with actual assets which he then used to buy more companies. This was so successful that he was able to become one of the 7th Core, the ruling body of the Capitalist Enterprise. Silk Spider, a con artist, took over as the founder's secretary and insulated him from the company. While maintaining Wendigo's standing as a major company, she sold off all of the company's assets while also selling bogus stocks, massively enriching herself.

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[[https://eveninsight.com/illegal-blacklisted-mlm-companies-list/ MLM Spam Companies]]

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That's the core of a [[http://en.wikipedia.org/wiki/Ponzi_scheme Ponzi scheme]], making one mark's investment work to make another mark feel comfortable. Named after Charles Ponzi, who became famously rich using this scheme in 1920. He later became an economic advisor to UsefulNotes/BenitoMussolini, which might explain a few things about UsefulNotes/FascistItaly.

''Series/{{Frasier}}'' features a relatively benign and small scale version of this when Niles convinces Daphne to invest in tips from his stock broker. When Frasier confronts him about how his own investment on one of those tips failed, Niles admits that while the first was good the rest were a bust and he's been repaying Daphne with interest from his own pocket; partially so as not to lose her life savings, partially because he liked how affectionate she'd get and wanted to keep that going. The scam quickly falls apart when Frasier makes a show in front of Daphne of trying to make an extremely large investment on the latest tip so that Niles has to give it up rather than pay an exorbitant amount back to maintain the lie.