payments that were promised to earlier investors. The operator of the scheme also diverts clients' funds for the operator's personal use. With little or no legitimate earnings, Ponzi schemes require a constant flow of new money to survive. When it becomes hard to recruit new investors, or when large numbers of existing investors cash out, these schemes collapse. As a result, most investors end up losing all or much of the money they invested. In some cases, the operator of the scheme may simply disappear with the money. Red flags According to the U.S. Securities and Exchange Commission (SEC), many Ponzi schemes share characteristics that should be "red flags" for investors. High investment returns with little or no risk. Every investment carries some degree of risk, and investments yielding higher returns typically involve more risk. Any "guaranteed" investment opportunity should be considered suspect. Overly consistent returns. Investment values tend to go up and down over time, especially those offering potentially high returns. An investment that continues to generate regular positive returns regardless of overall market conditions is considered suspicious. Unregistered investments. Ponzi schemes typically involve investments that have not been registered with financial regulators (like the SEC or the FCA). Registration is important because it provides investors with access to key information about the company's management, products, services, and finances. Unlicensed sellers. In the United States, federal and state securities laws require that investment professionals and their firms be licensed or registered. Most Ponzi schemes involve unlicensed individuals or unregistered firms. Secretive or complex strategies. Investments that cannot be understood or on which no complete information can be found or obtained are considered suspicious. Issues with paperwork. Account statement errors may be a sign that funds are not being invested as promised. Difficulty receiving payments. Investors should be suspicious of cases where they don't receive a payment or have difficulty cashing out. Ponzi scheme promoters sometimes try to prevent participants from cashing out by offering even higher returns for staying put. According to criminologist Marie Springer, the following red flags can also be of relevance: The sales personnel or adviser are overly pushy or aggressive (may involve high-pressure sales). The initial contact took place by a cold call or through a social network, a language-based radio or a religious radio advertisement. The client cannot determine the actual trades or investments that have been carried out. The clients are asked to