When the world financial crisis hit, it seems that even the most solid illegal Ponzi schemes are unraveling right before our eyes. It’s the worst thing that could happen to illegitimate investors; finally getting caught. Just recently, Hayim Regensberg was caught doing a Madoff.
How do they do it? A Ponzi scheme is basically a contract of fraud that uses other people’s money. Say you have one hundred people. Person 1 is paid with Persons 2’s money. Person 2 is paid with Person 3’s money. In the end, the money is not growing.
All you have is a lot of cashless folks who expect that they’re earning more, but in fact, they’re not.