In late 2008 and 2009, the United States was rocked by a series of multibillion-dollar Ponzi schemes and financial frauds. The largest was Bernard Madoff’s multi-year scheme. Sitting in Madoff’s shadow were still well known but lesser lights: Allen Stanford and his Stanford Financial Group, Thomas Petters and Petters Group Worldwide, and Scott Rothstein and Rothstein Rosenfeldt Adler. Each one of these criminal enterprises caused potential losses in the billions of dollars.
In a Ponzi scheme no investment actually takes place. Instead the perpetrator simply repays earlier investors with the funds from new investors. The perpetrator does not create any wealth through industry or investment. Such a scheme will eventually collapse.
