Ponzi schemes can lure even the most sophisticated investors. In many cases, seemingly reputable professionals are associated with the scheme which gives it an aura of legitimacy.
One of the most frustrating aspects of losing money in a Ponzi scheme is that by the time the scheme is discovered, the organizer has often lost all the money. You may have no effective recourse against them to regain what was lost.
However, when an accounting firm or auditor had a role in promoting a fraud, you could hold the firm responsible for your losses. Contact the Ponzi scheme attorneys at Silver Law Group for advice. Our experienced advocates are highly experienced in this field and assist investors from all over the country in bringing claims against accountants or auditors for aiding a Ponzi scheme.
Ponzi schemes are dependent on a constant flow of new investors. The returns that existing investors receive typically come from the capital which new investors unknowingly pump into the scheme. Accountants can play a big role in promoting a Ponzi scheme and making it seem like an attractive investment.
According to research conducted by the American Accounting Association, falsified accounting statements increase investor contributions to Ponzi schemes by 30 percent. Falsified audit statements decrease the chances regulators will detect the scheme by 40 percent. This means accountants can play a big role in helping fraudsters get away with their crimes – and thus, may hold some liability.
In some cases, accountants actively and intentionally provide false information. Perhaps more often, lax safeguards result in false financial statements and audit reports. The accounting professionals fail to conduct appropriate due diligence, accept false information from the fraudster, and release inaccurate and misleading reports that the public may rely on when deciding whether to invest.
Accountants have an obligation to produce accurate reports to the best of their ability. When an accounting firm produced reports that others relied on when making investment decisions, and those reports are later found to be inaccurate, the are several potential ways to hold the auditors liable for investors’ losses in a Ponzi scheme.
The theory of liability will vary from case to case depending on the circumstances. Silver Law Group attorneys will examine the evidence to develop a case that is most likely to provide relief for scammed investors.
Investors and their securities fraud lawyers could claim the accounting firm or auditor aided and abetted the fraud when there is evidence that a Ponzi scheme existed and the accountants knew or would have known that fraud was occurring. Once that benchmark is established, any actions the accounting firm took that affirmatively assisted the fraud could support an aiding and abetting claim.
A defrauded investor could also claim an accounting firm or auditor was negligent in its failure to detect a Ponzi scheme. There is an obligation for accountants to abide by certain principles, including due diligence. A failure to verify information or make basic inquiries could mean the accounting firm did not conduct its tasks with due diligence. When investors relied on the firm’s reports or audits, the firm could be liable to cheated investors due to negligence.
Sometimes an investor has a professional relationship with an accounting firm or auditor that recommends or promotes a given investment. If the investment turns out to be a Ponzi scheme, the firm may have liability for the losses their clients suffered. In this situation, an attorney with Silver Law Group could consider bringing a claim for breach of fiduciary duty.
If you were defrauded by someone operating a Ponzi scheme, you might never receive reimbursement from the Ponzi schemer, but others who supported it directly or indirectly could have liability. If claims against accountants for aiding a Ponzi scheme are successful, you could recoup at least some of your investment.
The attorneys at Silver Law Group have been advocating for investors for years, and they have substantial experience representing people all over the country who lost money in Ponzi schemes. Reach out today to find out how we can help your situation.
