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Ponzi Schemes

Ponzi schemes generally fall into two categories: (1) schemes that were designed to defraud investors from inception; and (2) existing businesses that becomes Ponzi schemes as a result of financial hardship or greed.

Ponzi schemes often attract investors with opportunities to earn relatively high returns and/or consistent profits. Once investors buy in to the scheme, participants may be blinded from the “too good to be true” reality of the scam with fabricated financial statements that report and confirm the promised returns and success of the “business plan.”

Since pure Ponzi schemes do not generate legitimate profits, the financial condition of the scheme progressively worsens with time. Schemers pay participants “dividends” and “income” from the investors’ own principal (cash) investments and the scheme is perpetuated by luring new investors into the fund.

The Bernard L. Madoff Investment Securities LLC scandal, which was discovered in December 2008, is perhaps the most prominent, Ponzi scheme of the 21st century, but many other Ponzi schemes were perpetrated dating back to 1899, when William “520 Percent” Miller opened for business as the “Franklin Syndicate” in Brooklyn, New York.

If you are a corporate insider, an analyst, accountant; or if you are a former employee or a third party with specific information related to the above-mentioned wrongdoings or similar fraud,  contact us and we will analyze your case and provide step-by-step assistance with filing a whistleblower claim to stop the fraud.

Learn more about how to be an SEC whistleblower.


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