Ponzi Schemes Fraud Lawyers

A Ponzi scheme is a form of investment fraud in which a company finances its payout of returns to investors using money paid by new investors. To keep the scheme afloat, these firms work to attract new money by promising investors high returns with little or no risk. One of the most notable recent Ponzi schemes in the news was one operated by Bernie Madoff. However, there have been thousands of Ponzi schemes through the decades both small and large in scale.

The funds that a Ponzi scheme generates are usually spent on enriching the manager of the scheme. By the time a Ponzi scheme collapses or investors have discovered the plan, it can be difficult or impossible for investors to get back their money. If you are concerned that someone duped you into investing in a Ponzi scheme, get in touch with an attorney right away.

Signs of a Ponzi Scheme

Because Ponzi schemes are fraudulent by nature, it can be difficult to spot one – this is why so many people get drawn into Ponzi schemes unaware. However, there are some common traits of most Ponzi schemes that should set off red warning flags as you review potential investment opportunities:

Who’s Responsible for Damages

Financial Industry Regulatory Authority (FINRA) rules prohibit individual financial advisors from selling securities their firm does not offer. When financial advisors do so anyway, without the firm’s knowledge, it’s illegal – a practice known as “selling away.” If your financial advisor engaged in selling away as part of getting you to invest in a Ponzi scheme, both the individual advisor and his employee brokerage firm can be held legally responsible for your losses.

A financial advisor who sells his client an investment of a Ponzi scheme may have recommended an unsuitable investment, failed to perform adequate due diligence, made misrepresentations or omissions and breached his or her fiduciary duty to you, the client. It can be difficult to determine your broker or brokerage firm is legally responsible for your losses in a Ponzi scheme. An experienced Ponzi scheme attorney can help you determine your legal options for recovering damages. Learn more about the types of investment fraud cases we handle.