The Madoff scandal may have you asking: What exactly is a Ponzi scheme?
The essence of a Ponzi scheme is better known today as a pyramid scheme.
In 1920, a Boston investment broker named Charles Ponzi told investors that he could earn them 50% returns on a 45 day bond, from his mysterious investing technique. Within the 45 days, [...]

“I really think very highly of him, people make mistakes,” wrote a Madoff confidant and NYSE broker. At a party over the weekend I met a nice girl from Boston University, and I forgot to ask for her number when I left. THAT was a mistake. 
Bernard Madoff, former chairmain of the board at the NASDAQ [...]