[robocat]

> then give them the promised returns anyhow by using other investor money (very illegal)

Actually, that is normal accepted business in many cases, and not illegal except in specific circumstances.

Classic example is commercial real estate bonds, where they roll over (the new bonds pay the old bond holders).

Or an IPO looks like a Ponzi, but usually isn't.

[wpietri]

An IPO doesn't involve the company paying stockholders. It involves investors paying the company. Then previous stockholders sell their shares to future ones.

And bondholders understand up front that they are getting cash back on a particular date; that's the whole deal with a bond. Stockholders, though, expect profits to come from a functioning enterprise that generates value, not newer stockholders.