Heidi decided to make extra money by offering to do investments for her friends for a fee. She actually did no investing, but used the fundsfrom new friends to pay off earlier enrollees. This worked well for a while, but her scheme came to light when her supply of new friends came to an end. She is guilty of which of the following practices? A. Operating a Ponzi scheme B. Operating a bait and switch scheme C. Account kiting D. Pretexting E. Defalcation

Question

Business

Jerome Dunn

1 March, 01:55

Heidi decided to make extra money by offering to do investments for her friends for a fee. She actually did no investing, but used the fundsfrom new friends to pay off earlier enrollees. This worked well for a while, but her scheme came to light when her supply of new friends came to an end. She is guilty of which of the following practices? A. Operating a Ponzi scheme B. Operating a bait and switch scheme C. Account kiting D. Pretexting E. Defalcation

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Answers (1)

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Adriel Lloyd · Answer 1

Answer: Option (A)

Explanation:

A Ponzi scheme is referred to as or known as a type/form of a fraud that tends to bait investors and thus pays high profits to the earlier investors with the funds gained or received from recent investors. This scheme tends to lead its victims and other individuals to perceive that these profits are collected from the sales or via other means, thus they tend to remain completely unaware that the investors after them are reason of these funds.