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PONZI SCHEME&MADOFF INVESTMENTSCANDAL
 
Introduction
A
Ponzi scheme
is a fraudulent investmentoperation that pays returns to separate investorsfrom their own money or money paid bysubsequent investors, rather than from any actualprofit earned.
 
 The Ponzi scheme usually entices new investors by offering returnother investments cannot guarantee, in the form of short-termreturns that are either abnormally high or unusually consistent. The perpetuation of the returns that a Ponzi scheme advertisesand pays requires an ever-increasing flow of money frominvestors to keep the scheme going.
 The system is destined to collapse because the earnings, if any, areless than the payments.
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