West Palm Beach Ponzi Scheme Defense Lawyer

Federal criminal attorneys defending Florida

Every savvy investor is aware that Ponzi schemes lurk about. Disguised as once-in-a-lifetime opportunities to earn unprecedented returns, Ponzi schemes offer large promises and nothing at all in terms of financial gain. In fact, investing in a Ponzi scheme is always considered a money mistake as the investors eventually discover the company that is charged with handling their investments never existed and, even worse, the perpetrator of the scheme has been pocketing the investors’ money all along. Ponzi schemes typically involve the following elements:

  • a promise that the investment will achieve an above average rate of return
  • a seemingly plausible explanation of why the return rate is so high
  • reasons for investors to believe the perpetrator is credible
  • payoff for initial investors
  • communicated successes to convince more people to invest

Who can be charged For participating in a Ponzi scheme

Ponzi scheme offenders are pursued by the FBI, DOJ, and SEC. Those who are prosecuted are typically finance professionals such as hedge fund managers, financial planners, and executives. In some cases, a company may start out as a legitimate business and eventually develop in such a way that the company plays a central role in a Ponzi scheme. In addition to the executives and people who originally orchestrate the scheme, people who work for the fraudulent company that is used as a vehicle for the scheme may also be privy to the fraud and, therefore, charged with a federal crime. There are even cases in which some of the people who invest in the scheme are aware of the fraud that is taking place. These people may decide to continue investing because they trust the perpetrators will always pay them a return while defrauding others.

How Ponzi schemes are investigated

Investigating a Ponzi scheme is often challenging because victims may be scattered across jurisdictions. Nevertheless, government agencies deploy forensic accountants who are tasked with following the money trail. Once the accountants are able to trace the crime back to the perpetrators of the scheme, they observe all the money that goes into the perpetrators’ accounts and compare it to the money that leaves the accounts. Once the government has enough evidence, federal prosecutors will file charges against the perpetrators, and federal agents will make an arrest.

Getting caught in the middle

In some cases, people may find themselves caught in the middle of a Ponzi scheme despite having no awareness that a scheme was in progress. Employees who work for the fraudulent financial firm may not be aware that their employer is defrauding people of large sums of money. Nevertheless, the federal government may contact employees and request interviews to determine how much the employees knew at the time the scheme was going on. In addition to employees, initial investors may also be investigated. Part of what makes a Ponzi scheme seem legitimate is the fact that in the beginning, investors do receive returns as promised. Sometimes, the first investors may be aware of the scheme and agree to participate based on an agreement with the perpetrators that the money invested will be repaid. Generally, Ponzi scheme fraudsters always pay returns in the beginning because they need to make the scheme appear legitimate. The scheme is able to continue operating because the original investors are paid with deposits that are made by new defrauded investors. Therefore, scammers may enlist the help of friends and family to become initial investors and to give the scheme the appearance of being real.

Charges for related white collar crimes

In addition to being charged for participating in a Ponzi scheme, there are other criminal charges a person may face. Mail and wire fraud charges are often filed against people who are accused of other white collar crimes; Ponzi schemes are no exception as fraudsters typically receive deposits from victims through the mail or through wire transfer. If the scheme involves misrepresentations regarding investing in securities, the federal government will likely file charges for securities fraud. Schemers may engage in money laundering to make it more difficult to trace the deposits received from victims to the various points at which the fraudsters using the money for their own purposes.

Penalties for Ponzi schemes

Defrauding people by creating false investment vehicles is treated as a very serious crime by the federal government. People who advance or benefit from Ponzi schemes may be sentenced to decades in federal prison, required to pay restitution to victims, and ordered to pay hundreds of thousands to millions in fines. Victims may also file a civil claim against the fraudster. It is not unusual for people who orchestrate a Ponzi scheme to lose all their financial assets and be sentenced to prison after the scheme is discovered.

Contact a West Palm Beach Ponzi scheme lawyer

The story the public most often hears about Ponzi schemes ends with an inevitable collapse in the structure of the scheme and the federal government entering the picture and taking those who are involved off to prison. For people who believe they may be under investigation for advancing a Ponzi scheme, the story can possibly have a better ending. Contacting a West Palm Beach Ponzi scheme defense lawyer during the early stages of a federal investigation often means having more options. An attorney can help people who are under investigation determine the most beneficial way to respond to being under federal investigation.