Ponzi Schemes on the Rise

Authorities reportedly discovered 60 alleged Ponzi schemes in 2019 with close to $3.25 billion in investor funds.

According to CNBC News last week, investors are getting pummeled as alleged Ponzi schemes reach an all time high since 2010. 

State and federal authorities reportedly uncovered 60 alleged Ponzi schemes in 2019 with a total of $3.25 billion in investor funds, according to the article.

A Ponzi scheme is a fraudulent investing scam promising high rates of return with little risk to investors. The Ponzi scheme, similar to a pyramid scheme, generates returns for early investors by acquiring new investors.

Historically, 3 of the largest Ponzi schemes were uncovered during the 2008 financial crisis, including Berni Madoff, who swindled $65 billion from unsuspecting investors, Thomas Petters with $3.7 billion and Allen Stanford with $8 billion.

The rise in Ponzi-like schemes could be attributed to the booming stock market and de-regulation at the federal level, according to CNBC.

Protecting yourself against a Ponzi-scheme

According to the Securities and Exchange Commission the following are Ponzi Scheme warning signs:

• Look out for promises of high returns with little or no risk. Every investment carries some degree of risk, and investments yielding higher returns typically involve more risk.
• Consistent returns. Investments tend to go up and down over time. Be skeptical about an investment that regularly generates positive returns regardless of overall market conditions.
• Unregistered investments. Ponzi schemes typically involve investments that are not registered with the SEC or with state regulators.
• Unlicensed sellers. Federal and state securities laws require investment professionals and firms to be licensed or registered. Most Ponzi schemes involve unlicensed individuals or unregistered firms.
• Secretive, complex strategies. Avoid investments if you don’t understand them or can’t get complete information about them.
• Issues with paperwork. Account statement errors may be a sign that funds are not being invested as promised.
• Difficulty receiving payments. Be suspicious if you don’t receive a payment or have difficulty cashing out. Ponzi scheme promoters may try to prevent participants from cashing out by offering even higher returns to stay invested.

If you have concerns regarding your investments and would like to speak with a securities attorney about your options, please call The White Law Group at 888-637-5510. 

The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Franklin, Tennessee.  For more information on The White Law Group and its representation of investors in FINRA arbitration claims, visit?https://whitesecuritieslaw.com.