Our office is representing victims in a large Ponzi scheme and handles fraud claims. Here are some signs of a Ponzi scheme and some misconceptions:

Signs of a Ponzi Scheme

1. Unregulated Market Fraudulent schemes occur more often in foreign countries and in countries with limited regulation or enforcement. Be wary of investments in markets that lack strong regulatory oversight.
2. Lack of Effective Third Party Monitoring For instance, Bernie Madoff had a small accounting firm handle his auditing. Ponzi schemes typically involve compliant or negligent third parties. Always research the third parties who are supposed to be monitoring your financial advisor.
3. Guaranteed High Returns with Little Risk One of the biggest red flags is the promise of high returns with little or no risk. All investments carry some level of risk, and no legitimate investment can guarantee high returns.
4. Unregistered Investments Ponzi schemes often involve investments that are not registered with financial authorities. Check whether the investment is registered with the Securities and Exchange Commission (SEC) or other regulatory bodies.
5. Consistent Returns Despite Market Conditions Investments that continue to provide consistent returns regardless of market conditions are suspicious. Genuine investments will fluctuate with market trends.
6. Complex and Secretive Strategies If the investment strategy is too complex to understand or shrouded in secrecy, it may be a scam. Legitimate investments are typically transparent about their strategies.
7. Issues with Paperwork Be cautious of errors in your investment paperwork, statements, or other documents. Consistent errors may indicate fraudulent activity.
8. Difficulty Receiving Payments If you encounter difficulties when trying to withdraw your money or receive payments, it could be a sign of a Ponzi scheme. Scammers often delay payments to attract more investors.
9. Pressure to Reinvest Ponzi schemes rely on continuous inflow of new investments. If you’re being pressured to reinvest your earnings or bring in new investors, this could be a warning sign.
10. Social Proof and Referrals Scammers often use social proof and referrals to gain trust. Just because someone you know invested doesn’t mean the investment is legitimate. Always do your own due diligence.

Misconceptions About Ponzi Schemes

1. Put it in Writing Having a written agreement is not a sign of a legitimate investment. For example, Madoff provided written, albeit fraudulent statements. Schemers generally put their promises in writing knowing they cannot be enforced.
2. Prior Wrongdoing Some financial advisors have a bad history, sometimes well-hidden. Ask for a direct check of the advisor’s regulatory history. This may reveal past fraudulent activities or misconduct.

Were You a Victim of a Financial Scheme?

If you believe you have been a victim of a financial scheme, it’s important to take action. Our experienced team is here to help you navigate this challenging situation and seek the justice you deserve. We are committed to helping you recover your losses and hold the responsible parties accountable. Our office handles fraud claims on a contingency basis, meaning you pay nothing unless we win your case.