Ponzi Schemes

What is a Ponzi scheme?

A “Ponzi scheme” is a fraudulent investment scheme in which the perpetrator uses the investors’ funds as the primary source of the repayments. In most Ponzi cases, the perpetrator sells fictitious investments and uses the proceeds of those sales to pay off earlier investors, as well as to bankroll his own lavish lifestyle.


How do I recover my investment?

In most cases, it is prudent to file whatever claims you can against the perpetrator(s) of the Ponzi scheme, even though the perpetrator is almost always insolvent. Sometimes the claims have to be filed in bankruptcy or receivership proceedings. It is important that you do not miss the filing deadlines.

If a broker or an advisor steered you towards the Ponzi scheme, you will probably have claims against the broker/advisor and the broker/advisor’s firm. The firm may be liable under an agency theory or because it failed to properly supervise the broker/advisor. Under FINRA rules, the firm is required to have a reasonable supervisory system in place to prevent its brokers and advisors from steering clients towards non-approved investments.

If a non-licensed individual (i.e. someone who does not hold a securities license) steered you towards the Ponzi scheme, that person may be liable to you, either because they are complicit in the fraud, or because they transacted business as a broker without the requisite license.


Can I consult with a lawyer about my Ponzi scheme losses?

If you have think that you may have lost money in a Ponzi scheme, you should contact an experienced securities law attorney immediately. We have attorneys who specialize in these types of cases. We also have experienced bankruptcy and receivership attorneys who can help you navigate the bankruptcy/receivership claims process. If you would like to set up a free consultation, please call Daniel J. Broxup at (616) 632 8059.