When a person or commercial enterprise lures investors into a fraudulent scheme, promising unusually high returns for little to no risk, the “investment” may actually be a Ponzi scheme.  This scheme may continue for a very long time, even years, before it is unearthed. By this point, the fraudster is almost certain to have lost most or all of the capital provided by investors, but sources of financial recovery can still be possible for victims.

Numerous parties could be held liable for compensation if they knowingly or negligently facilitated the fraud. An attorney can explain the Ponzi scheme litigation process if you or a loved one has lost money to this form of financial fraud.

Liable Parties In The Ponzi Scheme Litigation Process

If you are the victim of a Ponzi scheme, it is vital to have a knowledgeable attorney protecting your rights from day one. Individuals who have lost money to a Ponzi scheme may have multiple options to seek financial recovery.

Commercial banks, investment banks, brokers, financial advisors, auditors and other third parties who may have aided and abetted the Ponzi scheme can be legally liable as intermediaries. Third-party liability may apply whether these entities directly participated in the scheme, supervised the schemer’s conduct, or even unwittingly allowed the scheme to continue.

Silver Law Group represents injured investors in individual, as well as class action, claims involving Ponzi schemes and can guide you step-by-step through the litigation process.

Important Phases In The Ponzi Scheme Litigation Process

Ponzi scheme litigation will depend on the liable parties from whom the injured investor is seeking financial recovery. Once the injured investor initiates a lawsuit by filing a complaint against the defendant(s) and details the damages they are seeking, both parties will gather and exchange evidence in a process known as discovery.

Should the case proceed to trial, the injured investor must demonstrate the fraudulent nature of the investment and the defendant’s involvement. If the court finds in the plaintiff’s favor, recovery of numerous damages including the amount of lost investments, plus interest, may be awarded.

Class Actions

Alternative dispute resolution methods, including arbitration or mediation with the defendant, can be a more cost-effective and efficient method of resolving investor claims. FINRA arbitration claims against the selling stockbrokers are a frequent claim bought by investors. Class action litigation may also be a viable route for many investors rather than filing an individual case against the defendant(s) involved.

In a class action case, investors who lost both small and large amounts of money can combine their cases into to a single lawsuit. This can streamline the litigation process while ensuring that investors with varying degrees of losses get to have their voices heard.

In a class action, a lead plaintiff will be chosen whose losses should represent those of the average member of the class. Once the lawsuit is certified by the court, injured investors who are members of the class will be notified about the case, their rights, and any deadlines to opt out if they choose not to be included.

Settlement Or Trial

The class action lawsuit would then move forward into the discovery phase, and potentially settlement negotiations. The case could also proceed to trial if settlement discussions are not fruitful. Any settlement or court award would be distributed to the class members according to the court’s decision, so each individual should be compensated according to their specific financial harm.

While the lead plaintiff and other investors who suffered the largest losses will frequently play an active role in a class action, this route also allows investors with smaller Ponzi scheme losses to seek recovery without the cost burden of filing individual litigation.

In many cases, the SEC may appoint a receiver to gather the assets of the Ponzi schemer and pursue specific claims, our attorneys frequently work with SEC receivers to help maximize an investors recovery and pursue claims that don’t necessarily belong to the receiver.

Let Our Attorney Represent Your Interests Throughout The Ponzi Scheme Litigation Process

Ponzi scheme litigation can involve a variety of legal actions, and it is important to have an experienced securities fraud attorney advocating for your rights every step of the way. Investors who have lost money to a Ponzi scheme may be entitled to pursue claims against the perpetrator of the fraud, as well as third parties who aided and abetted the scheme.

Silver Law Group can advise whether it may be beneficial to band together with other Ponzi scheme victims to file a class action lawsuit. We are well-versed in cases involving a wide range of liable entities, including banks, brokerage firms, and other large financial institutions. Contact Silver Law Group today to ask for your free and confidential consultation with one of our Ponzi scheme attorneys.