What is a Ponzi scheme?
A Ponzi scheme is a fraud named after Charles Ponzi, who perpetrated his fraud during the 1920s. Another famous perpetrator is Bernard Madoff, in the US.
A Ponzi scheme is a fraudulent investment scheme offering very high returns to investors over a short period. After people invest, returns are paid to separate investors. However, these returns are not from profits earned, but usually from money invested by new investors. The new investors pay the old investors and so the word spreads. At this stage, there are no financial losers. Even the investors who do not lose out could still be considered victims of this fraud. This is due to the fact that they probably would not have invested had they known the whole truth of the investment.
Many people are unaware that fraud can be charged as a crime even if there is no financial loss to anybody. Eventually, the scheme collapses, and the scheme originator disappears, along with all the investments. Often these schemes are stopped by regulators long before a collapse of this nature, due to the fact the promoter is often selling unregistered securities.
What should I do if I am accused of Ponzi fraud?
If you are accused of Ponzi fraud, you are likely to be involved in financial services and as such your reputation is vital to you. Even if no criminal charges are brought, it may trigger other sanctions if the Financial Conduct Authority (FCA) starts an investigation. You need to have an expert lawyer who has experience in financial services to help you defend your business and reputation.
Our investment fraud lawyers are experts in their field and we have been recognised by the Legal 500 as a top tier law firm for criminal defence for fraud. We are a nationwide law firm specialising in investment fraud, such as Ponzi schemes and pyramid schemes. As a full-service law firm, we can draw on our significant resources, which include independent experts, to help get the best outcome for your case. Investment fraud cases, such as Ponzi scheme fraud, generally carry with them a large amount of paperwork, and our experienced team are able to go through all the files and papers needed, so we can understand every detail of the case. Our team have dealt with complex fraud cases, including investigations brought by a variety of agencies such as the Serious Fraud Office (SFO) and the Financial Conduct Authority (FCA).
We always seek to be discreet and minimise any possible damage made by false allegations of Ponzi scheme fraud. Our experienced team of investment fraud lawyers has the expertise and knowledge to look at the required level of detail needed to robustly defend you. Contact our expert fraud solicitors on 01616 966 229 or complete our online enquiry form.
What are the penalties for Ponzi fraud?
Sentencing for financial fraud is complex and depends on culpability, the level of harm that has been committed or intended and the impact the crime has had on the victim(s). Ponzi scheme fraud can carry with it a prison sentence. Bernard Madoff, an infamous Ponzi scheme fraudster, was handed down a 150-year prison sentence in the U.S. in 2009. While in the UK we don't have such long prison sentences, financial fraud has the maximum sentence of ten years per offence. Fraudsters who are found guilty may also have to pay a substantial fine, as well as face other penalties such as:
- Disqualification from acting as a company director
- Deprivation orders
- Financial reporting order
- A serious crime prevention order
- Confiscation order - This typically means that any proceeds made from the crime will be confiscated and may be used to compensate victims.
Depending on the circumstances of the case it may be possible to get a reduced sentence for a guilty plea or if you cooperate with the authorities. A judge makes their decision based on the guidelines, the evidence and the particulars of the case, and determine the length of sentence for those found guilty.
If you have been accused of Ponzi scheme fraud, you will need an experienced and expert investment fraud solicitor on your side. Call us on 01616 966 229 or complete our online enquiry form.