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Ponzi Schemes

What is a Ponzi Scheme?

A Ponzi scheme is a fraudulent investment operation that pays returns to investors from either their own money or money received by other, often later investors rather than from any funds earned from the investment itself. There is no question using new investor’s money to pay previous investors in an effort to keep them convinced of the fraudulent scheme is illegal. This detrimental cycle continues until the entire scheme ultimately falls apart due to lack of new investors or someone engaging a professional once they feel they are being scammed.

How to Tell if You Are Being Scammed

Those who commit investment fraud are often very charismatic and convincing and in many cases are associated with a reputable entity who has failed to properly supervise the wrongdoer. The investment opportunity may have been a genuine opportunity that did not work out as the promoter had planned or the entire operation may have been a fraud from the start. Regardless, those who continue to sell a fake promise are absolutely breaking the law. A few indicators that a Ponzi Scheme could be occurring are:

  • the promise of no risk and/or incredibly high returns, with often some of the initial investors being paid these "returns" early on
  • manipulation sales tactics of last minute or an extremely rare opportunity to invest
  • unlicensed brokers or sellers
  • unregistered or a general lack of or questionable information regarding the investment
  • difficulty getting information in writing or errors in what is provided
  • and questionable performance data, due to the fraudsters either completely lying or cherry-picking the numbers they share
  • difficulty receiving paperwork or payments as well as difficulty of reaching the broker or other individuals you gave money too
  • requests to roll into new investments
  • consistent returns that do not align to the overall market fluctuations

Many different individuals and groups of people are targeted in these types of schemes. Beyond individual investors and retirees, both small business and large corporations can be targeted with this type of fraud. Sadly, these fraudsters find an opportunity to defraud any group of people and greedily push through their scheme.

What to Do if You Have Been Contacted by Authorities or Simply Think You Are Being a Victim of a Ponzi Scheme

Since Ponzi Schemes are a type of securities fraud, it is likely the government will eventually uncover the scheme and charge the fraudster. In addition to this, it is imperative that the victims prepare engage an investment fraud law firm like Chicago-based law firm of Loftus and Eisenberg to help with a civil case in order to ensure the highest chances of recovering any investments. Steps to follow if you are either contacted by authorities or fear you are being scammed

  • Do not say anything about being scammed to the broker or whoever you invested with directly: Giving the fraudster an indication that you think you are a victim of a Ponzi Scheme could make recovery of your investment harder.
  • Contact an experienced investment fraud attorney who is willing to fight for you.
  • Provide your legal team a detailed turn of events with communications and other paperwork so gather and organize as much of that as possible from the start.
How the Lawyers of Loftus and Eisenberg Can Help

Not all attorneys have the necessary experience to help recover damages in investment fraud cases. Investment fraud and Ponzi Schemes require the representation of lawyers who understand a very specialized sector of the law. The lawyers of Loftus and Eisenberg are experienced investment fraud lawyers who will not only investigate for any signs of investment fraud, determine all responsible parties, as there are often more than just the broker you have worked with, and work with you on relevant FINRA regulations and the legal process to attempt to get your investment back.

The best chance of recovery for investors comes from the professionals who assisted the Ponzi Schemer. Loftus and Eisenberg is experienced in recovering from banks, lawyers, and accountants who aid and abet Ponzi schemes or otherwise negligent in performing their duties necessary to prevent fraud. The business lawyers at Loftus and Eisenberg will work with you on a personalized alternative fee-based agreement, often working solely or completely on a contingency, meaning you only pay fees to the firm if you win.

If you think you have been a victim of any type of securities or investment fraud or Ponzi Scheme, call the business attorneys at Loftus and Eisenberg or fill out our 24 hour intake form.

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