The Ponzi scheme is simple and has remained so for over 90 years. In essence, the operation pays returns to existing investors from their own money or money paid by new investors, rather than from any actual profit earned. New investors are lured into the scheme by offering returns that are unusually high. In order to keep working, the Ponzi scheme requires an ever-increasing flow of money from investors. The scheme collapses when clients demand refunds and there aren’t enough new investors to keep the wheels turning.

The leader of the scheme usually has a stellar reputation which helps perpetuate the fraud. In the case of Charles Ponzi, investors panicked after news reports appeared uncovering Ponzi's involvement in a Montreal bankruptcy. By 1921, Ponzi was in jail.

When he was released a few years later, he was unrepentant. He reportedly said: "I had given them the best show that was ever staged in their territory since the landing of the pilgrims.”

Canada has had its fair share of Ponzi schemes in the last year.

Following the fall of Earl Jones, in September, two Alberta men were charged with ripping off investors to the tune of $100 million between 1998 and 2008.

Another Montreal adviser, Themistokles Papadopoulos, is accused of cheating clients out of $86 million.

And last month, Weizhen Tang, the "Chinese Warren Buffett," was arrested in Toronto for masterminding a Ponzi scheme that has left millions of dollars unaccounted for. It is alleged that between January 2006 and March 2009 more than 100 victims from Canada, the United States and China were defrauded of about $30 million through an online trading Ponzi scheme.