The SOP of Ponzi Scheme

Standard Ponzi schemes are based on a sleight of hand that creates the appearance of a fund whose overall value is growing faster than the value of the investments made in it. In reality the opposite is true. The fraudster behind a Ponzi scheme usually helps himself to some of the incoming capital, but the fund is not creating any new capital with which to replenish these leakages, let alone pay the returns it has promised. Any dividends paid to maintain the illusion of growth come from new investments. And this appearance of growth that does not really exist is, of course, the lure that brings into the scheme new participants, whose capital is utilized by the Ponzi scheme’s operator to maintain that facade.