What is Ponzi Scheme ?
One of the simplest yet most effective investment scams is the ponzi scheme. The promoter promises investors a return on investment and says it is secure, but there is no real 'investment'.
The promoter convinces people to invest with their scheme. They then use the money deposited by early investors to pay the first 'dividend' until investors feel comfortable and decide to invest more. Some investors then encourage their family and friends to join. Eventually the scheme falls apart because the promoter starts to spend the money too quickly or the pool of investors dries up