A Ponzi scheme is a form of investment fraud where early investors are paid returns using money from newer investors, named after Italian con artist Charles Ponzi, who became infamous in the 1920s for his massive scheme. While Ponzi gave the fraud its name, similar scams existed earlier, such as Adele Spitzeder in Germany (1869–1872) and Sarah Howe in the U.S. in the 1880s, and the concept was even featured in Charles Dickens's novels Martin Chuzzlewit and Little Dorrit. The scheme works by promising high returns with little or no risk, but the underlying business is either non-existent or exaggerated, and the operator simply diverts new funds to pay off earlier investors and for personal use. These schemes inevitably collapse when it becomes difficult to recruit new investors or when many existing investors demand their money back, leaving most participants with heavy losses. The U.S. Securities and Exchange Commission (SEC) warns of "red flags" such as guaranteed high returns, overly consistent performance regardless of market conditions, and unregistered investments. Ultimately, the operator often disappears with the remaining funds, making it a devastating financial crime that continues to trap unsuspecting investors.