A Ponzi Scheme is a type of investment fraud where a company pays its customers using money brought in by new investors. In order for a Ponzi Scheme to continue, the company needs to attract an increasing number of new investors to pay out fraudulent investment returns to its existing clients. Ponzi Schemes inevitably collapse, leaving victims with a total loss.
Ponzi Schemes are often difficult to spot, and many otherwise sophisticated investors have fallen victim to them. The largest Ponzi Scheme in history was operated by Bernie Madoff, and it was only discovered when it collapsed.
There are warning signs that all investors should watch out for – if you see any of these issues with your broker or investment company, you should call Gucciardo Law. Warning signs include: cash payments, extremely complex investment schemes, issues obtaining paperwork and tax documents, trouble making payments to investors, unlicensed investment advisors or companies, very consistent returns, and high returns with no risk.
Ponzi schemes fall under investment fraud. If your broker or investment company has created a Ponzi scheme, they may face both criminal and civil penalties. It’s important for investors who think that they are victims of a Ponzi scheme to speak to professionals quickly, as it may be difficult to recover losses after the Ponzi Scheme collapses.
Our team at Gucciardo Law are experts at both spotting Ponzi Schemes and helping victims recover their losses. If you think that you are a victim, call us today for a free consultation.