Ponzi schemes never start out as Ponzi schemes. Generally, most Ponzi schemes begin as managed funds or hedge funds which generally purport to trade marketable securities, stocks, bonds, options, currencies, commodities or purport to employ some proprietary or otherwise fool-proof, disciplined trading strategy that generates profits or returns for investors. Other Ponzi schemes have included private loan portfolios, real estate, promissory notes, structured settlements, viatical settlements, tax liens, certificates of deposit, and a variety of other investments, which purport a history of higher than average rates of return with lower degrees of risk.
Outright Theft or Misappropriation
That is how most Ponzi schemes begin. However, somewhere along the way, the funds are never actually invested, or drift into a series of unapproved investments, profits are a fiction, the funds suffer losses, or are laid waste by outright theft or misappropriation, and the funds obtained from new investors are needed to meet redemptions or manufacture returns for other earlier investors.
Generally, once these obligations cannot be met, the scheme unravels or is discovered, the principals die, abscond, or are incarcerated, the authorities seize whatever assets are left, generally only a tiny portion of the assets invested, and the average victim stands little or no chance at making a reasonable recovery from a collectible source.
However, sometimes investors do not find these schemes on their own. Sometimes registered investment professionals perpetrate these schemes. Sometimes registered investment professionals of other fiduciaries recommend or refer customers to invest in these schemes, or otherwise participate or facilitate these schemes, knowingly or unknowingly, generally to further their own economic or pecuniary interests.
In very limited circumstances, victims of Ponzi schemes may have a viable form of recovery against these individuals and the otherwise solvent or insured entities with whom they are associated.
Guiliano Law Firm – Ponzi Schemes Fraud Lawyers
The Guiliano Law Firm, P.C. Practice limited to the representation of investors in claims against stockbrokers and investment professionals for fraud, the sale of unsuitable investments, breach of fiduciary duty, failure to supervise. National Practice. Contingent Fee. Free Consultation. If you have been the victim of a Ponzi scheme, you should consult with counsel to determine your rights, obligations or remedies. Contact us for a free confidential evaluation of your claims at (877) SEC-ATTY.
The Ponzi Schemes fraud attorneys at the Guiliano Law Firm serve clients nationwide.