An investment fraud that’s made to seem plausible by the payment of quick returns to the first investors from money invested by later investors.
Typically, investors are recruited through ads and emails promising high returns in very little time. Investors are asked to provide money up front. Early investors may receive high returns fairly quickly from “interest cheques.” They’re often so pleased that they invest more money, or recruit friends and family as new investors. But the investment doesn’t exist. The “interest cheques” are paid from investors’ own money and the contributions of new investors. The scheme eventually collapses when the number of new investors drops. Ultimately, the promoters vanish, taking your money with them.