A Ponzi scheme is a fraudulent and illegal investment operation that promises quick, easy and significant returns on investments with little or no risk. The operator, at the pyramid’s top, acquires a group of investors that is initially provided with tremendous returns via funds secured from the second group of investors. The second group, in turn, is paid with funds obtained from a third group of investors and so on, until the number of potential investors is exhausted and the scheme collapses.
The operator may either appropriate a portion of the incoming investments as the scheme progresses or wait until the operation is about to collapse before absconding with the funds.
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