Stan is an investment manager. He has received money from various investors and given them a promise of very high returns on their investments. The invested money is not supplying enough capital to pay the returns promised, so he has started using new investors' money to pay older investors. By advertising and by word of mouth, people are anxious to invest with Stan because of the money being paid, and with the influx of new investors he is able to continue operating. Stan is:

Question

Quizplus · Accepted Answer

Using the new investors' money to accomplish short-term payouts to older investors is the heart of a Ponzi scheme.

Stan Is an Investment Manager