Ponzi Schemes

A Ponzi scheme pays earlier investors with money from new investors, not real profits. Here is how the scheme works, why it always collapses and the record-setting case of Bernie Madoff.

Robbing Peter to pay Paul

A Ponzi scheme promises steady, high returns, but there is no real investment. Early investors are paid with money from new ones, which builds trust and brings in more money. The scheme collapses when new money slows or many investors ask for their money back at once.

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