If you have been a victim of financial fraud in New York, it could take years to put your life back together. Therefore, it is important that you understand the nature of a Ponzi scheme or other attempts to take your hard-earned money.
Common elements of a Ponzi Scheme
The scheme involves offering unusually high and unusually consistent returns on your investments. In many cases, you will be asked to put money into unregulated securities or asked to contribute without truly knowing where the money is going. You are typically repaid with money that is obtained from new investors as they become part of the fraud.
How Ponzi schemes differ from pyramid schemes
It isn’t uncommon to confuse a pyramid scheme with a Ponzi scheme. While they both require regular infusions of cash to survive, they are different in how they acquire cash. A pyramid scheme typically asks you to buy into a program instead of investing in a real estate deal or some other project. Multi-level marketing companies such as Amway are also similar to Ponzi or pyramid schemes, but they can be legal business structures. This is typically true because you generally aren’t forced to purchase inventory that cannot be returned.
Possible penalties for participating in an illegal scheme
If you are believed to be perpetrating a Ponzi or other type of illegal financial scheme, you could be charged with securities fraud. Bernie Madoff was convicted of 11 counts of securities fraud in 2009 after scamming notable individuals such as Steven Spielberg. He was also ordered to pay millions in restitution to victims.
If you are charged with committing white-collar crimes, you may find it advisable to meet with a criminal defense attorney as soon as possible. An attorney can work with you to construct a strategy to counter the allegations.