A Ponzi scheme generates income for old investors by attracting new investors who are promised high returns with little or no risk.
The fraudulent investment scheme is based on the use of funds from new investors to pay back old patrons.
Companies that participate in a Ponzi scheme direct their energy to attract new customers for investment, otherwise their scheme will become illiquid.
The SEC has issued guidance on what to look for in potential Ponzi schemes, including a return guarantee or unregistered investment vehicles with the SEC.
The largest Ponzi scheme was carried out by Bernie Madoff, defrauding thousands of investors out of billions of dollars.
White collar crime is a non-violent crime of deception or concealment in order to obtain or prevent the loss of money or gain personal or business gain.
Black money includes all funds earned as a result of illegal activities, as well as other legitimate income that is not taken into account for tax purposes.
A boiler room is a scheme in which sellers use high-pressure selling tactics to persuade investors to buy securities, including speculative and fraudulent securities.
Channel stuffing refers to the practice of a company supplying more products to distributors and retailers through a distribution channel than end users can purchase in a reasonable amount of time.
A High Yield Investment Program (HYIP) is a fraudulent investment scheme that aims to generate extremely high returns in excess of 100% on investments.
The LIBOR scandal refers to a major episode of financial collusion in which various banks manipulated one of the most powerful base interest rates in the world.