How does a Ponzi Scheme work?
A Ponzi Scheme is one in which money from a continuous flow of new investors is used to pay older investors. In other words, one group invests funds, then another group is recruited to invest funds, from which the first group takes profits. This can only continue for a finite amount of time as the exponential growth requirement of new investors can quickly grow larger than any available pool. The most recent person to be charged with running one is Gregory Viola, arrested on August 11, 2011 in New Haven CT.
Updated on Sunday, February 05 2012 at 08:18PM EST