A pyramid scheme is an illegal venture relying on a continual recruiting of new investors to pay returns to investors who got in earlier.
The people at or near the top of a pyramid scheme make money, while those lower down could end up getting nothing (after losing their initial investment), as it eventually becomes impossible to recruit more people willing to ante up.
Related Fool Articles
- A Glorified Confidence Game?
- Ponzi Schemes Explode
- Making Peace With Ponzi
- Is Your 401(k) a Ponzi Scheme?
- Avoiding the Next $50 Billion Ponzi Scheme
Recent Mentions on Fool.com
- Why Roundy's, Herbalife, and Gogo Soared Today
- Here's What Billionaire Value-Hunter Carl Icahn Is Buying
- Did Mr. Market Overreact to David Tepper's Acquisition of J.C. Penney?
- Should We Invest in This Multilevel Marketer on Its Weakness?
- Should Investors Bet on More Growth at Nu Skin?
- The 3 Things Dragging Avon Down