What are Ponzi Schemes?
A Ponzi scheme is investment fraud that basically circulates investors’ money to pay “returns” back to other investors. Named after a man who duped thousands of people in the 1920s, Ponzi schemes can defraud thousands of innocent victims out of millions of dollars. The U.S. Securities and Exchange Commission, or SEC, is responsible for investigating and prosecuting Ponzi fraudsters.
Frustratingly, the SEC does not have the capacity to detect all securities fraud cases. It relies on information provided by honest, concerned citizens to detect Ponzi schemes as well as fraud against the government. If you are aware of any securities fraud or fraud against the government, you should contact an experienced Qui Tam attorney from Tycko & Zavareei, LLP today at 202-973-0900.
How Ponzi Schemes Work
With Ponzi schemes, the fraudster convinces unsuspecting individuals to invest in a plan with little or no risk yet high, rapid returns. Instead of actually investing in stocks or other securities, the fraudster then draws in new investors. Their payments are actually paid to the initial investors as “returns.” Additionally, the Ponzi fraudster will skim off these payments for personal use. The cycle continues until collapse.
Ponzi Scheme Indicators
To protect yourself from Ponzi schemes, there are some red flags that you should recognize. These warning signs include:
- The promise of high investment returns with little or no risk
- Consistent returns that do not match market fluctuations
- Difficulty receiving clear information about the process
If you are aware of a Ponzi scheme, it is important to talk to a lawyer immediately so that you can get help in presenting your information to the government.
Contact Us
Sadly, Ponzi schemes are not the only frauds that can scam millions of dollars from both individuals and the government. Thus, you should always remain on alert against securities fraud. If you know of a securities scam or fraud against the government, you should consult a lawyer about the next step to take. To discuss your case, contact a tenacious Qui Tam lawyer from Tycko & Zavareei, LLP at 202-973-0900 today.
