A Ponzi scheme is a fraudulent investment that pays returns from new capital invested with the fraudsters instead of from a legitimate investment.

Ponzi Scheme

An investment scam where returns are paid to earlier investors using the capital of newer investors, rather than from profit earned.

Fraudulent Investment

An investment scheme where deceit or trickery is used to convince investors to participate, often resulting in loss of investment due to misrepresentation.

New Capital

Funds or assets newly invested in a business or company for the purpose of expansion, development, or improvement of operations.