What constitutes a Ponzi scheme?

^4. "A 'Ponzi scheme' is a fraudulent arrangement in which an entity makes payments to investors from moneys obtained from later investors rather than from any 'profits' of the underlying business venture. The fraud consists of funneling proceeds received from new investors to previous investors in the guise of profits from the alleged business venture, thereby cultivating an illusion a legitimate profitmaking business opportunity exists and inducing further investment. [Citation.]" (People v. Dunn-Gonzalez (1996) 47 Cal.App.4th 899, 906, fn. 2.)