A Ponzi Scheme is a fraudulent investment SCAM that promises high returns with little to no risk. It works by paying existing investors with the money of new investors, creating the illusion of a profitable enterprise. The scheme eventually collapses when there are not enough new investors to pay existing ones. The term 'Ponzi Scheme' is named after Charles Ponzi, an Italian immigrant who ran such a SCAM in the early 20th century.