Investment Scam (General)

The first notorious case was Charles Ponzi's Boston scheme of 1920; the same pay-old-with-new trick was documented earlier in Sarah Howe's Ladies' Deposit Company in Boston in the 1880s and William Miller's '520 Percent' scheme in Brooklyn in 1899.

The pay-old-investors-with-new-money scheme is named after Charles Ponzi, who in 1920 in Boston promised 50% returns in 45 days from postal reply coupons; earlier versions include William F. Miller's '520 Percent Miller' scheme (1899) and Sarah Howe's Ladies' Deposit Company (1880s). Boiler-room share frauds spread in the 20th century, and in 2008 Bernard Madoff's collapse became the largest Ponzi scheme on record. Online forex and binary-options platforms grew in the 2010s, followed by crypto schemes such as OneCoin. From about 2016 'pig-butchering' scams, which build a relationship before steering a victim to a fake trading app, spread from China-linked groups to industrial scam compounds in Southeast Asia, often staffed by trafficked workers.

Victims are promised high, steady returns, often from a secret strategy, a new technology or crypto trading. Early investors may be paid 'returns' out of later investors' money so the scheme looks real and spreads by word of mouth. Online versions show profits on a fake dashboard, then invent taxes, fees or 'unlock' charges when the victim tries to withdraw. The scheme collapses when new money slows down or the operators disappear.

It scales from one salesman to industrial scam compounds, needs only a website or app that displays fake profits, and exploits the strongest motivator there is, the wish to get rich. It is the single most lucrative fraud reported to the FBI, $8.65 billion in 2025, and Chainalysis estimates crypto scams took about $17 billion worldwide in 2025. Prosecution is rare for the online forms because the operators are abroad and the money leaves in crypto, though domestic Ponzi operators are routinely convicted.

US victims reported $8.65 billion in investment-fraud losses to the FBI in 2025, the top category for the fourth year running, and UNODC estimated $18-37 billion was lost to scams in East and Southeast Asia in 2023. The largest cases are Madoff ($64.8 billion in fictitious balances) and the Prince Group ($15 billion in bitcoin sought in forfeiture). Victims include retirees who lose life savings and, in the compounds, an estimated 220,000 trafficked workers (UN OHCHR, 2023).