Ponzi Scheme Fraud Lawyer
In 2019, the number of Ponzi schemes and the amount of money lost by investors rose to the highest level in a decade. Ponzi schemes tend to flourish in a bull market, when investors are seeking supersized returns.
The bubble often bursts when there is a downturn, and the promoters cannot find new money to fuel the scheme. Many investors lose a significant portion of their life savings in Ponzi schemes.
If you have been defrauded in a Ponzi scheme, you do not just have to write off the money as lost. The experienced investment fraud attorneys at Rikard & Protopapas can work diligently to get back as much money for you as possible.
What Is a Ponzi Scheme and How Does it Work?
Investors are devastated when they learn that the investment that they thought was earning them solid returns was a Ponzi scheme. Not only are there no profits, but they have lost most or all of the money that they invested. The advisor has taken the money and used it for other purposes.
A Ponzi scheme is a classic example of robbing Peter to pay Paul. Not everyone who invests in a Ponzi scheme ends up with large losses. The earlier investors receive the consistent profits that the fraudster promises. In effect, they are taking money from the later investors to pay these returns. The promoter needs to consistently bring in new investors to keep paying returns to the earlier investors.
Once they can no longer get new money, the entire scheme will unravel. Then, investors will find that they cannot withdraw their money, even when they make a request to do so.
Not all hope is lost when you have been defrauded. You can hire an experienced Ponzi scheme lawyer who can help you pursue all possible leads to get back as much money as you can. The attorneys at Rikard & Protopapas can help you track down your money and work to recover it.
Examples of Notorious Ponzi Schemes in History
One of the most infamous Ponzi schemes in recent history was perpetrated by Bernard Madoff. For years, Madoff was known as the investor who could do no wrong. He purportedly delivered consistent returns year in and year out, with little to no volatility in returns.
In retrospect, this should have been one of the major red flags that only a few people saw. One activist even tried to report Madoff to the SEC, which did not take any action. By the time all was said and done, Madoff stole as much as $20 billion.
Here are some examples of the more notorious Ponzi schemes throughout history:
- Tom Petters stole nearly $4 billion from hedge funds and non-profit organizations by raising money to buy retail merchandise and sell them to discounters at a profit.
- Scott Rothstein stole $1.2 billion in a scheme that involved investments in fictitious legal settlements.
- Allen Stanford bilked investors out of $7 billion by issuing fake certificates of deposit.
Ponzi schemes have been surging due to the recent explosion of the cryptocurrency market and the collapse of stablecoins that promise high returns.
Red Flags that Are Indicators of Ponzi Schemes
Here are some red flags that should tell you that all is not what it seems with your investment:
- The promoter claims to have a foolproof investment strategy.
- The investment has consistently large returns, with little volatility or actual risk.
- The advisor will not give you detailed information when you ask for it, and always seems to be giving you excuses why they cannot furnish data. There is little transparency with the fund.
- The advisor is not registered with the SEC or a self-regulatory organization
- There is a delay when you are trying to withdraw money
- There is no independent verification of investment returns from a reputable accountant
- You do not receive legal documentation about the investment or monthly statements regarding your account
Again, using the example of Madoff, there is no possible way that a money manager can return such a steady amount through bull markets and bear markets. In addition, nobody quite knew how he traded or generated returns.
Remember, if something seems too good to be true, it generally is. If the promoter has the golden answer to make consistently high returns, they would already have plenty of money to do it themselves, and they would not be pressuring you to invest or recruit more investors. There is no such thing as an investment that makes money every time and all the time.
What to Do as a Ponzi Scheme Victim
It will not be hard to get a judgment from the person who stole from you. It will be more difficult to get some of your money back. Here are some steps that you can take to increase your chances of recovering some of what you have lost:
- Raise red flags as soon as you suspect that there is something wrong — the more time that the schemer has, the more they will be able to dispose of your money and make it disappear.
- Hire an experienced attorney who knows how to “follow the money” and be creative and aggressive in taking action on your behalf.
- Retain all the necessary documentation needed to show the extent of your losses.
- Report the scheme to law enforcement for them to take action against the fraudster.
You May Be Able to Get Lost Money Back From a Ponzi Scheme
When you have been defrauded in a Ponzi scheme, one of your first questions is whether you can get the money that you lost back. The answer is going to be that it depends on your situation.
Ponzi schemes may result in a bankruptcy filing. For example, in the Madoff case, the bankruptcy trustee fought valiantly for years to try to recover as much money as possible. He went after early investors and doggedly fought on behalf of the victims. As of this writing, the trustee has recovered close to 90% of what the investors had stolen.
Unfortunately, this is a rare exception and not the norm. Many times court-appointed receivers or trustees simply do not have the resources to go after all of the “helpers” of the Ponzi scheme. You need your own lawyer to fight for you.
Rikard and Protopapas attorneys have significant experience in pursing recoveries against Ponzi Schemes and the “helpers” in order to recover our client’s hard-earned money.
How You Can Recover Some of Your Lost Money
In many cases, the money that you get back may not come from the promoter themselves. By the time that they are caught, they may have already spent or lost your money.
As you can see, your attorney may be able to take action against others. There may be companies that helped the promoter, even if they did not actively know what was going on. Brokers have an obligation to know who they are doing business with and report any suspicious activity. Some of the early investors could even have been in on the scheme, and they can be sued too.
Unfortunately, you cannot even trust everyone who claims that they will help you recover the money that you have lost. Not only are there Ponzi schemers, but there are also people who try to prey on victims who are desperate to get some of their money back. You need to make sure that you trust the person you depend on to fight on your behalf. Your attorney should have a track record of successfully fighting on behalf of victims.
You need a skilled attorney who will never give up, leaving no stone unturned in trying to get as much of your money back as possible. History has shown that the most determined people have gotten some money back when there was even some possibility.
Here are some sources that we may look to, so we can get your money back:
- Relatives of promoters who have received recent returns
- Third parties who aided and abetted the scheme, such as accountants, attorneys, and clearing firms
- Those who made money from the Ponzi scheme (other than the promoter)
- Liquidation of the assets held by the Ponzi scheme
- Insurance agents of financial advisors who recommended the Ponzi scheme
You may get your money back through a combination of these sources. Oftentimes, the fight can take years for you to even get some of what you lost returned.
While you may never be paid back in full, your investment may not be a full loss. In some cases, your money could be returned little by little, as your lawyer recovers it over time. Ponzi scheme financial recoveries happen over years, as opposed to months, and you need an attorney who will stay the course and pursue every lead possible.
About Rikard & Protopapas
Rikard & Protopapas has represented thousands of clients across the United States in investment fraud cases against financial advisors and brokerages. Advisors and institutions must abide by strict laws when handling investments for clients and they must be held accountable if they fail to do so.
If you have concerns about an investment you made or believe you are a victim of a Ponzi scheme, please call our firm immediately. There is no cost to explain your situation to our legal professionals and see how we can help.*
How Our Attorneys Can Help You
You need to have an attorney who is on your side and knows the system well. Time is crucial when you are tracking down missing assets.
Our Ponzi scheme lawyers can help you in the following ways:
- Review the facts of your case to understand the nature of the scheme
- Help you to report the scheme to the relevant authorities
- Follow the trail of the money to figure out where it went and who may have it now
- Cast a wide net on your behalf in figuring out legal actions to take to recover the money
- Aggressively pursue all possible defendants
- File FINRA arbitration claims against any registered representatives who violated the rules
- File cases in state and federal courts against all wrongdoers
You should not be alone in trying to fight the system. Contact the lawyers at Rikard & Protopapas for a free consultation by sending us a message online or calling us today at (803)-805-7546. We can explain your legal options and the potential of financial recovery when you have been defrauded in a Ponzi scheme.
Our investor loss attorneys work for you on a contingency basis, and we are not paid unless you recover money.