Question

Stan is an investment manager. He has recieved money from various investors with a promise of very high returns on their investments. The invested money is not supplying enough capital in order to pay the returns promised so he has started using new investor's money to pay older investors. By advertising and by word of mouth, people are anxious to invest with Stan because of the money being paid and with the influx of new investors he is able to continue operating. Stan is.

(a) operating a Ponzi scheme,
(b) guilty of conspiracy to defraud,
(c) racketeering, or
(d) operating an insider trading operation.

Answer 1

(a) operating a Ponzi scheme

Step-by-step explanation:

Ponzi scheme -

It is a type of fraud , which attracts investors for getting better profit in returns , is referred to as Ponzi scheme.

These schemes , attracts investors , with fake promise and exceptional deals , and then does not fulfil , any promise , and can lead to a big scam.

Hence , from the question, the example shown is about a Ponzi scheme.