what is ponzi scheme
A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk. Unregistered investments. 2  Ponzi schemes typically involve investments that have not been registered with the SEC or with state regulators. 3  Registration is important because it provides investors with access to key information about the company's management, products, services, and finances.