Question

Elements of a ponzi scheme: -Involved de____ -Greed by the p________ -Greed by the i_______ -C_______ -Lure investment funds from victims and then pay those victims a premium or interest from money that is paid by ________ ________.

Answer 1

A Ponzi scheme is a fraudulent investment operation that involves paying returns to investors using money from new investors rather than from actual profits.

Step-by-step explanation:

A Ponzi scheme is a fraudulent investment operation that involves paying returns to investors using money from new investors rather than from actual profits. The key elements of a Ponzi scheme include:

1. Deception: The scheme involves deceiving investors by promising high returns or low-risk investments.
2. Greed by the promoter: The person or group running the scheme is motivated by greed and seeks to make personal financial gains.
3. Greed by the investors: The investors are also driven by greed, hoping to earn high returns without fully understanding the risks involved.
4. Confidence: The promoter builds confidence among investors by making regular payments or providing fake statements that show earnings.
5. Lure investment funds: The scheme attracts new investors by promising high returns and using the money contributed by these new investors to pay off earlier investors.

For example, in a Ponzi scheme, the promoter may convince investors to invest their money in a fake investment opportunity, promising high returns in a short period of time. However, instead of using the invested money to generate actual profits, the promoter uses the money from new investors to pay off earlier investors, creating an illusion of profitability.