A pyramid scheme involves the collection of money from new investors to pay earlier investors. Despite the appearance of a legitimate multi-level marketing program with legitimate products or services to sell, along with the promise of high returns on a short-term investment, these schemes eventually collapse. At some point, it becomes impossible to collect enough money from new investors, and many investors lose all of their money. 2 A Ponzi scheme is a type of pyramid scheme named after Charles Ponzi, who scammed New England residents in the 1920s with the promise of a 40% return in just 90.
