Lesson: How a Ponzi Scheme works/ExerciseL1

Listening Exercise

So, you may have

about Ponzi Schemes in the news. Everybody

they're illegal but you might not

how they work. So, Ben is here to show us. To start off, Ben

a few people to invest their money with him. At

end of the year he

those clients amazing returns that beats every other

in the market. Needless to say the investors are thrilled. In fact they're so ecstatic

all the money they're making that they tell all

friends and family about it too; who tell their friends, who tell their friends. In the

market, most investors make money some years and

money others. But Ben's Ponzi Scheme, yeah, it never loses money. In fact, it

beats the market by a huge margin, but the returns he pays to these people aren't from

profits. He just takes the money, these new guys invest and gives it to these guys. But as

he can't get enough new money from this group to pay these people then the

pyramid starts to crumble. Because they're not getting paid

. Ben and these guys who invested first made a killing but these

lost all their money. So, the next time a guy like Ben

to get you to invest in something that sounds too good to be

, it probably is. Just ask Ben.