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What is a Ponzi Scheme?

A Ponzi scheme is a type of investment fraud operation that originated in 1920 when it was first carried out by businessman Charles Ponzi.

In a Ponzi scheme, the fraud operator pays returns to investors with money raised through new investors, rather than through the operation’s profits. This is because the operation turns no profits. Ponzi schemes are unsustainable and rely on fraudulent investment paperwork paired with a lack of knowledge on the investors’ part to continue to operate. This may be achieved by producing bank statements to show false high returns to encourage investors to invest more money into the operation and keep their money in the scheme longer. The organizer might also attempt to prevent investors from withdrawing their money by offering them new plans for investment, promising them opportunities for higher returns.

Always investigate investment opportunities thoroughly before you hand over any money. Ponzi schemes are often disguised as legitimate investing opportunities that promise substantial returns for investors. These promises may be paired with urging to act quickly to take advantage of the opportunity and vague terms about the exact nature of the investment and how investors are paid.

Terms to Be Wary of with Investment Opportunities

  • Hedge futures trading
  • High-yield investment program
  • Offshore investment

Any time you are offered an investment opportunity and one of the above phrases comes up, be wary and proceed with caution. The opportunity could potentially be a Ponzi scheme. These buzzwords are closely associated with this type of operation. Remember, if an opportunity sounds too good to be true, it most likely is. Also be wary of unlicensed sellers and investments that are not registered with the Securities Exchange Commission (SEC).

If You are a Victim of a Ponzi Scheme

Document all interaction with the scheme operator as well as all receipts of your transactions involving it. These may include the following:

  • cash receipts;
  • voided checks;
  • solicitation letters;
  • bank statements; and
  • receipts for money orders.

Adequate documentation is key to your claim because it shows exactly how much money you lost and when you lost it. This paper trail is critical to supporting your claim if you opt to file a claim against the scheme’s operator.

The next step is contact an experienced fraud attorney to build your claim. Explain your situation to him or her to determine whether you have grounds for a claim to recover your money. If the scheme collapses or is shut down by authorities, its trustees may be required to pay back the scheme’s victims.

Investment Fraud Attorneys in Winter Park

If you have fallen victim to a Ponzi scheme or any other type of investment fraud in Florida, contact Hornsby Law at 407-599-3800 to discuss your claim with one of our firm’s experienced fraud attorneys. You deserve to have your money returned and we can help. Do not wait to contact our firm and begin working on your case – when you are seeking to recover lost funds, being proactive is key to a successful recovery.

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