Ponzi Scheme

A Ponzi scheme is an illegal investment scheme.

Ponzi Scheme Practices

Ultimately, in a Ponzi scam, there is an investment scheme where the primary scam artist pools money from initial investors which he or she lives off or and may pay back a portion of as interest or gains.  The scam artist will then also collect funds from later investors which will be paid back to initial investors, as interest or gains.  Usually, there is false documentation which demonstrates earnings, so the investors continue to invest in the scheme. Ultimately, the Ponzi scheme will collapse when there are no more new investors to supply new money for the older investors.  When the scam artist is finally arrested, he or she will face multiple criminal charges, including but not limited to theft, racketeering, misrepresentation and wire fraud.

Ponzi Scheme vs. Pyramid Scheme

Frequently, a Ponzi scheme is compared to a Pyramid scheme.  However, the two types of schemes differ.  A Pyramid scheme uses multi-level marketing in order to create a network of investors who all serve as recruiters of other investors.  In addition, all of the investors receive some sort of a benefit from the investments.  However, in a Ponzi scheme, there is one person who oversees the scam and recruits the investors.  In addition, this primary person receives the benefit of the investments.

Ponzi Scheme Legal Help

If one has been subject to a Ponzi scheme, it is critical to consult with an experienced ponzi scheme attorney as soon as possible.  Ponzi schemes can result in bankrupting one’s savings and retirement investments, so it is imperative to take whatever legal action one may have.  An attorney can assist in evaluating one’s legal options and in selecting the most appropriate course of action.