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Federal Prosecution of Ponzi Schemes

Ponzi schemes are designed to tap into the widespread desire to make money with minimum effort. Unfortunately for those who engineer them, Ponzi schemes are a form of fraud that is always destined to fail. The scheme depends on a constant cycle of new contributions, and will collapse when new cash stops flowing in. Ponzi schemes involve perpetrators promising investors that they will earn large returns with very low risk. When new investors contribute to a Ponzi scheme, the architects of the scheme keep a portion of their investments, and use the rest to satisfy earlier investors. A “successful” scheme will gain a reputation as a solid investment, attracting new victims regularly. Although some people who run Ponzi schemes are able to preserve the illusion for several years, even the most meticulously planned schemes will eventually break down, when the number of new investments is not enough to satisfy earlier investors. Often, the underlying investments are incredibly weak or even nonexistent, and cannot produce financial returns at any level, much less a high rate. If you are concerned about the possibility of fraud charges being brought against you, contact a criminal defense attorney in the Chicago area to discuss your case.

With the most recent economic recession in 2008, many honest investment programs, which were not begun as fraudulent schemes, were converted into Ponzi schemes as the stock market dipped. The jarring losses that investors sustained across almost every sector of the market were difficult for investment fund managers to accept, and many of them turned to misleading their clients in an effort to keep their asset management firms from going under. From these initial falsehoods, the transition to reaching out to new investors in order to keep funds afloat was not difficult for many managers.

Because of this substantial increase in investor fraud that grew out of the economic downturn, the federal government has placed a strong emphasis on prosecuting Ponzi schemes and related types of crime. In the years immediately after the downturn, the Financial Fraud Enforcement Task Force was created to attack and deter fraud across the market. The Securities Fraud Working Group, an integral part of the Task Force, coordinates the efforts of FBI, IRS, SEC, CFTC, FTC, and many other agencies’ investigators and prosecutors, in order to pursue convictions and harsh penalties nationwide.

Contact an Attorney Immediately for Help

If you believe that you are being investigated for investor fraud, or financial fraud of any kind, it is crucial to secure effective counsel immediately. You should never answer investigators’ questions without an attorney present.

Goldman & Associates will mount an aggressive defense if you have been charged with investor fraud. Our team of attorneys will work tirelessly to defeat your federal fraud charges, to preserve your reputation and your freedom. Contact our Chicago area offices today for a free consultation.