New York, NY securities attorney Jenice L. Malecki talks about Ponzi scheme and how it operates. She explains that Ponzi schemes are the classic “take money from Peter to pay Paul” scenarios. Often, these schemes begin with seemingly legitimate intentions, though not always. When the original investment objective fails or cannot generate the promised returns, the schemer continues taking new investor funds to pay earlier investors’ interest or dividends—funds that were never truly available. Typically, Ponzi schemes involve ill-fated or unsustainable investments and often take the form of promissory notes or contracts that promise guaranteed returns. Essentially, a Ponzi scheme relies on perpetuating the illusion of profits using incoming investor money rather than legitimate investment gains.