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Explain the concept of a ‘Ponzi scheme’
assistant
A Ponzi scheme is a fraudulent investment operation that gets money from new investors to pay earlier investors, giving the false impression that the scheme has high rates of return with little risk. It is named after Charles Ponzi, a con artist who duped investors out of millions in the 1920s. In a Ponzi scheme, the promises made by the scheme's operator are usually extremely exaggerated, with little to no underlying financial security. Investors are usually enticed to participate with offers of guaranteed high returns within a short amount of time and those at the top of the pyramid benefit the most while those at the bottom are left with losses. The scheme eventually collapses when the operator runs out of new investors or financial resources, leaving most of the investors with significant losses.