In the case of Bernard Madoff,a scheme was created as an investment program in which the early investors were paid out returns on their investments,not from earnings but from funds supplied by later investors,although they thought the earnings were the results of successful investments.Which of the following describes this scheme?

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Quizplus · Accepted Answer

The described scheme is called a Ponzi scheme, named after the infamous fraudster Charles Ponzi. The scheme involves paying early investors with the funds contributed by later investors, creating the illusion of high returns to attract more investors. In reality, there are no actual earnings or profits, and the scheme collapses when there are not enough new investors to pay the earlier ones. This is exactly what happened with Madoff's investment program.

In the Case of Bernard Madoff,a Scheme Was Created as an Investment