Certified Anti-Money Laundering Specialist Certification (CAMS) Practice Exam

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What amount did Charles Ponzi's scheme defraud people of?

$1 million
$5 million
$10 million
$15 million

The correct answer is: $15 million

Charles Ponzi's scheme, which became infamous in the early 20th century, involved a fraudulent investment operation promising high returns to investors. The amount attributed to the fraud in Ponzi's scheme is estimated to be around $15 million. This figure is significant not only because of the total financial loss to investors but also because it marked one of the earliest and most notorious cases of investment fraud, leading to the term "Ponzi scheme" being used to describe similar operations thereafter. The scheme relied on the continuous influx of new investors to pay returns to earlier investors, creating a façade of profitability. When the scheme ultimately collapsed, it became evident that the promised returns were never generated through legitimate investments, but rather funded through the contributions of newer investors. Understanding the scale of Charles Ponzi's fraud helps illustrate the potential impacts of such schemes on individuals and financial systems, reinforcing the importance of vigilance and regulatory oversight in preventing future occurrences of similar fraudulent activities.