A: Acme XYZ is a scam because ____, ____, and ____.
B: Shutting down Acme XYZ could hurt a lot of good people.This is a red herring, because it did not try to defeat the premise, nor did it try to prove the counter-premise.
Instead, this argument plays the "appeal to pity" fallacy, as well as tacitly admitting that it is a scam. Just that you shouldn't kill it, please take pity on those who's in it.
It was used by none-other than Andy Bowdoin, leader of the Ad Surf Daily auto-surf Ponzi scheme.
You can read the full indictment here (PDF file). Bowdoin plead guilty in May 2012. His Ponzi involved well over 100 millin dollars, about half was seized and returned to the victims.
This argument is also very much related to "it paid me" argument, where the defender of the scheme argues that as long as people are getting PAID you should let the thing continue.
However, that in itself is a fallacy. In a Ponzi scheme and a pyramid scheme, you can get your money (i.e. your return) if you make sure enough NEW people join so there's money in the scheme to pay YOU. Thus, the only way to prevent good people from being hurt is to drag even MORE good people into it.
So this can be essentially translated as "just let me get my money out, I don't care about any one else".
Not very altruistic, is it?
It is not the intent of this article to explain how a Ponzi scheme can be prolonged (that'll be a different topic) so I'll link to it when I have it written.
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