When a Ponzi scheme is perpetrated against investors, it can be years before the fraud unravels and investors learn that their money has been lost to a scam. The scheme usually could not have been successful if not for the schemer’s ability to raise investments through third parties. These parties are often involved in legitimate financial enterprises, such as attorneys, accountants, financial advisors, commercial banks, and investment banks.
These third parties who knowingly or unknowingly enabled the scheme can provide a pathway to financial recovery for Ponzi scheme victims. An attorney who regularly litigates third party professional claims for aiding and abetting a Ponzi scheme can protect your best interests while pursuing all defendants who may be potentially liable.
Ponzi schemes can involve a wide range of seemingly legitimate investments, including securities, bonds, and even cryptocurrencies. These schemes can also involve tangible assets like precious metals, real estate, and commodities.
In creating a Ponzi scheme, the fraudster almost always offers exceptionally high and consistent returns to investors with the promise of very little risk. Early investors are then paid from the contributions by later investors, rather than dividends stemming from profits of a real business venture. Inevitably, the Ponzi scheme collapses, although it may be some time before this happens.
With a Ponzi scheme, investors’ money is not actually invested but instead is used to perpetrate a scam that relies on adding investors to keep going. Ponzi schemes are usually uncovered when that money runs out and the bubble bursts.
As such, pursuing a claim against the actual Ponzi schemer is rarely a viable solution because the investments are always recycled without the company itself making a real profit. However, a third party can be legally liable for aiding and abetting a Ponzi scheme if they significantly enable the fraud or intentionally assist in perpetrating it.
Claims against commercial or investment banks, accountants, financial firms, investment advisors, brokerages, and third other parties can be an essential vehicle for investors to achieve justice. Liability can fall on a third party for actions like ignoring warning signs of fraudulent activity, failing to respond appropriately once fraudulent activity was detected, or directly participating in the fraud.
For example, a victim can sometimes recover losses by showing that a brokerage recommended a Ponzi scheme to them. Even if the brokerage firm was not technically enacting the fraudulent scheme, they may be found partially liable if they negligently allowed it to persist.
As soon as you suspect an investment might be a Ponzi scheme, it is important to quickly consult with an attorney. Not only are third party professional claims for aiding and abetting a Ponzi scheme extremely complicated, but these entities may try to cover their tracks to avoid culpability.
Be sure to safeguard any financial documents, records, or other paperwork you have related to the allegedly fraudulent transactions. A swift and timely response can maximize the likelihood of a recovery. A securities fraud lawyer can help you understand the legal avenues available while uncovering all sources of liability and compensation.
Third party professional claims for aiding and abetting a Ponzi scheme can help investors who have lost money. Unfortunately, the actual perpetrator of the Ponzi scheme will not always be a great target because they will typically have lost the money they took by the time the scheme is uncovered. Damaged investors can often find a way to collect the value of their losses and additional compensation through a third-party, such as a brokerage firm.
The Ponzi scheme attorneys at Silver Law Group are experienced at winning maximum financial recovery to help make victims whole again. Our firm frequently works alongside trustees and SEC receivers in these cases, and can join or initiate a class action lawsuit, if necessary. Contact us today to receive your free, no-obligation legal consultation.
