Ponzi schemes vs Pyramid schemes
Slide from our Live Webinar of Feb. 2011: The Anatomy of Corporate Frauds and Ponzi Schemes
Published on: Mar 4, 2016
Transcripts - Ponzi schemes vs Pyramid schemes
Differences Pyramid v. Ponzi Scheme Pyramid Scheme Ponzi Scheme Typical “hook” Earn high profits by making one payment and finding others to become distributors of a product. The scheme typically does not involve a genuine product. The purported product may not exist or it may only be “sold” within the pyramid scheme. Earn high investment returns with little or no risk by simply handing over your money; the investment typically does not exist. Payments/profits Must recruit new distributors to receive payments. No recruiting necessary to receive payments. Interaction with original promoter Sometimes none. New participants may enter scheme at a different level. Generally acts directly with all participants. Source of payments From new participants – always disclosed. From new participants – never disclosed. Collapse Fast. An exponential increase in the number of participants is required at each level. Relatively slow if existing participants reinvest money.