Your broker sold you what looked like a solid investment. Then it collapsed. Now you’re looking at real losses and a licensed professional who may have known exactly what they were doing.
Ponzi scheme lawyers at Erez Law handle cases like yours nationwide, and we pursue every responsible party, not just the person who handed you the paperwork. Call us at (888) 293-3445 or reach us through our contact form for a free, confidential case review.
Most Ponzi scheme victims have stronger claims than they realize because licensed brokers and their firms carry legal obligations that go well beyond making a sales pitch. When those obligations are violated, FINRA arbitration, the dispute resolution system administered by the Financial Industry Regulatory Authority, gives investors a defined path to recovery.
Why Do Ponzi Scheme Victims Choose Erez Law?
At Erez Law, we represent investors across the country in Ponzi scheme and investment fraud cases, and we prepare every case from the start as if it will go to a hearing. That matters because brokerage firms take opposing counsel’s track record seriously when deciding how to respond to a claim.
Our results speak for themselves. In Madhany Revocable Trust v. Scott Andrew King and Citigroup Global Markets, Inc., we secured an $11,100,000 award for our client.
We Take Cases Other Firms Pass On
We focus on serious investor losses, typically those involving $150,000 or more, caused by misconduct from licensed brokers, brokerage firms, or investment advisory firms. If your case fits, we pursue it.
Location Does Not Limit Your Options
We represent investors nationwide. Whether you are in Texas, California, Florida, or anywhere else, FINRA arbitration does not require you to hire a local attorney, and neither do we.
We Go to Trial If We Have To
Most firms settle. We prepare every case as though it will be tried, which changes how opposing counsel responds. Jeff Erez has handled cases that went to 19-day hearings, and that willingness to stay the course has made a real difference in outcomes.
What Is a Ponzi Scheme, and Why Does Your Broker Matter?
A Ponzi scheme is a fraudulent investment operation that pays returns to earlier investors using money from new investors rather than actual earnings. The scheme depends entirely on continuous new money flowing in, and when that stops, it collapses. Victims are left with significant losses while the person running the scheme has already spent the funds.
What makes many Ponzi scheme claims legally actionable is not just the scheme itself but how the investor got into it. Licensed financial advisors have legal and regulatory obligations under FINRA rules to recommend only suitable investments and to conduct adequate due diligence before recommending anything to a client.
When a broker recommends a Ponzi scheme investment without doing that work or misrepresents the nature of the investment, the broker and their employer brokerage firm may carry legal liability for the resulting losses.
What Is “Selling Away,” and Why Does It Matter?
Selling away occurs when a financial advisor sells a client an investment that the advisor’s firm has not approved. Under FINRA rules, this practice is prohibited.
If your advisor sold you into a Ponzi scheme through a side deal or outside investment that their firm did not sanction, both the advisor and the brokerage firm may be liable for your losses, even if the firm claims it had no knowledge of the transaction. Firms have supervisory obligations, and failure to supervise can create direct liability.
How Do You Know If You Have a Ponzi Scheme Claim?
You have a valid Ponzi scheme claim if a licensed financial professional was involved in putting you into the investment. The scheme alone does not automatically create a claim against your broker or their firm, but broker misconduct surrounding the scheme does.
The following situations are worth examining closely with an attorney:
- Unsuitable recommendation: Your broker recommended the investment without properly assessing your risk tolerance, financial goals, or investment experience.
- Misrepresentation or omission: Your broker described the investment inaccurately or omitted material risks that a reasonable investor would want to know.
- Failure to conduct due diligence: Your broker recommended the investment without adequately researching its legitimacy or structure.
- Selling away: Your broker sold you an investment not offered or approved by their firm.
- Churning or fee motivation: Your broker placed you in the investment primarily to generate commissions rather than to benefit you.
How Does Ponzi Scheme Recovery Work?
Ponzi scheme recovery for investors who worked through a licensed broker typically runs through FINRA arbitration rather than traditional court litigation. FINRA arbitration is faster than civil litigation, often resolving within 12 to 18 months, and it is the dispute resolution forum required under most brokerage agreements.
In FINRA arbitration, your claim is heard by a panel of arbitrators who review evidence, evaluate the conduct of the broker and firm, and issue a binding award. The process involves document requests, witness testimony, and legal arguments from both sides. Brokerage firms appear at these proceedings with their own legal teams, which is why preparation and trial-readiness matter.
In some Ponzi scheme cases, recovery also involves SEC enforcement proceedings and court-appointed receiverships, with the Securities and Exchange Commission (the SEC) serving as the federal agency that oversees securities markets and has the authority to freeze assets and appoint a receiver to distribute funds to victims.
A receiver is a court-appointed official who takes control of the scheme’s remaining assets and works to return money to investors. In cases where broker misconduct played a role, FINRA arbitration and SEC-related recovery proceedings could run concurrently.
What Can You Recover?
Recovery in a Ponzi scheme case depends on the facts of your situation and the specific misconduct involved. Recoverable losses include the following:
- Investment principal lost in the scheme
- Returns you were promised but never received, if misrepresentation is established
- Consequential financial damages tied to the broker’s misconduct
- Costs associated with the arbitration process, in some cases
Recovery is not guaranteed, and outcomes vary based on the evidence, the conduct of the broker, and the resources of the brokerage firm. What we do is build the strongest possible case and pursue every avenue available. If you want to know where your specific situation stands, call (888) 293-3445 for a free consultation.
What Are the Warning Signs of a Ponzi Scheme?
Recognizing a Ponzi scheme before it collapses is not always easy, but certain patterns appear repeatedly across cases we have handled. Knowing these patterns matters for two reasons: it helps you identify whether you have been victimized, and it provides context for evaluating what your broker knew or should have known when they recommended the investment to you.
Common warning signs that appear in Ponzi scheme cases include the following:
| Warning Sign | Why It Matters |
| Consistent, high returns regardless of market conditions | Legitimate investments fluctuate. Investments that report steady gains even during market downturns often lack legitimate underlying performance. |
| Pressure to reinvest rather than withdraw | Ponzi schemes depend on cash remaining in the operation. Brokers or managers who discourage or delay withdrawals present a significant red flag. |
| Vague or overly complex explanations of strategy | When a broker cannot clearly explain how a fund generates returns or relies on proprietary complexity to avoid questions, that lack of transparency carries legal significance. |
| Unregistered investments | Most Ponzi schemes involve securities that are not registered with state regulators or the SEC. Registration is required under the Securities Act of 1933, and its absence is a warning sign that a reasonably diligent broker should have recognized. |
| Paperwork inconsistencies | Account statements that do not match independent custodian records, or records that are difficult to obtain, often point to mismanagement or fraud. |
The legal relevance of these signs is not just that they point to a Ponzi scheme. They also point to what your broker should have discovered through proper due diligence. A broker who missed these signs failed their professional obligations to you.
Ask Erez Law
My financial advisor put me into an investment that turned out to be a Ponzi scheme. Do I have a claim against the advisor?
Can I file a claim against the brokerage firm, not just the individual broker?
Does it matter that I live in a different state from the firm?
How long does a FINRA arbitration case take?
FAQ for Ponzi Scheme Lawyers
Can a broker be held responsible for a Ponzi scheme they did not create?
What is the difference between a Ponzi scheme and a pyramid scheme?
Is there a deadline to file a Ponzi scheme claim through FINRA?
Do I need to prove the investment was a Ponzi scheme to win my arbitration claim?
What happens if the person who ran the Ponzi scheme has no money left?
Pursue Your Ponzi Scheme Recovery Before the Clock Runs Out
Jeffrey Erez, Ponzi Scheme Lawyer
Every month that passes in a Ponzi scheme case is a month of evidence aging, assets dispersing, and legal deadlines narrowing. The investors who fare best in these situations are the ones who get the full picture of their legal options early and move on them decisively.
We represent Ponzi scheme victims nationwide from our Miami office at 1 SE 3rd Avenue, Suite 1670, Miami, FL 33131. We take qualifying cases on a contingency fee basis, meaning no upfront attorney’s fees. Clients could be responsible for case costs.
Call (888) 293-3445, or fill out our contact form at erezlaw.com.