Ponzi schemes are among the most notorious forms of investment fraud. These schemes often promise risk-free or low-risk guaranteed returns to investors. The scheme is not actually generating any real returns, and instead just paying older investors with capital provided by newer investors. Not only do Ponzi schemes violate federal law, but these fraudulent enterprises inevitably collapse.
Filing a Ponzi scheme lawsuit can help you recover some of your losses. Silver Law Group has helped victims recover millions back in damages over the past few decades. A Ponzi scheme attorney can advocate for your rights while taking legal action against all culpable third-parties, including investment banks, commercial banks, stockbrokers, and other entities who may have enabled the scheme.
Many Ponzi schemes are able to grow because the perpetrator is connected to a much larger financial institution that lends credibility to the fraudulent operation. The scheme may only get off the ground once initial investors unknowingly recommend the scheme to friends or family because there is a built-in layer of trust with that advisor, bank, or firm.
Unusually consistent returns are a hallmark of Ponzi schemes, as are the promise of above-average attractive returns without risk. Account statements that contain unclear or erroneous information, or a lack of detailed information, could be connected to a Ponzi scheme.
Many Ponzi schemes use unregistered securities or other unregistered investments because there is no legitimate company to invest in. Investment professionals and firms marketing or promoting a Ponzi scheme are frequently unlicensed. A popular saying is that “Ponzi schemes aren’t bought, they are sold” because a network of financial advisors or stockbrokers help sell the scheme.
Investors who try to cash out their investment and are told they cannot, or who do not receive a payout, may be dealing with Ponzi scheme. The schemer may even ask the investor to avoid cashing out now to get a bigger payout in the future. This is a common sign that the perpetrator is close to running out of new capital to fund the scheme and pay older investors. Investors who lose money may be able to recover part or all of their losses by filing a Ponzi scheme lawsuit with help from a securities fraud lawyer at Silver Law Group.
Filing a lawsuit is one option to seek financial recovery for Ponzi scheme losses. Liable parties in these cases could include any individuals or entities who perpetrated the Ponzi scheme, as well as third parties who facilitated the scheme.
Because the actual Ponzi schemer has typically lost most or all of the funds that they collected from investors by the point the scheme is unraveled, proving third-party liability can be integral to collecting monetary damages. Third parties could be brokerage firms, accountants, and banks, among others.
Even if a third party such as an investment bank was not directly aware of the fraud, they could still be legally liable for actions such as failing to conduct proper due diligence or other negligent actions. Class action lawsuits filed by a group of investors who suffered losses from the same Ponzi schemer are common vehicles by which victims can collect their money back.
Securities and Exchange Commission (SEC) enforcement actions, which involve a court appointment of an independent person or receiver to protect and recover assets from the Ponzi scheme, can also be a means of recovery for victims. Another path to recovery can occur through bankruptcy proceedings, where a court-appointed trustee takes control of the assets and works to recover funds for victims through various actions.
Silver Law Group regularly represents victims of Ponzi schemes while working in cooperation with SEC receivers and bankruptcy trustees through legal proceedings. These cases often run parallel to civil litigation filed directly by investors who lost money in the Ponzi scheme.
If you have lost money to this form of financial fraud, you may have numerous legal options at your disposal. We can assist with filing a Ponzi scheme lawsuit against any third parties who enabled it.
Silver Law Group can put our years of experience to work to uphold your rights and work tirelessly to get your money back from the liable parties. Give us a call today to receive your legal consultation and discuss options for a lawsuit.