Ponzi Defined

A ponzi is said to have occurred when the source of dividends, paid-in-capital, is used to pay distributions of dividends instead of retained earnings or revenue sources. In this case, new investors fund the previous investors in the name of social cause or entrepreneurial scheme until the income stream runs dry, the aggregate source has no more funds to pay off shareholder liabilities, and they all end in malfeasance as poor. Ponzi schemes are well known to offer higher returns than offered to the public markets and under the guise of investment or pooled shareholder capital that is needed in order to preserve wealth. Ponzi’s also feed off of fresh entrepreneurial ideas considered sound for investment. The current rash of online social marketing schemes and networking sites is a good target for the sake of participatory economics. Corporations tend to be arranged around pools of capital either debt or paid in as equity. The collateral requirements of which far exceed the capabilities of the lone inventor


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