{"id":229,"date":"2012-03-07T11:49:39","date_gmt":"2012-03-07T16:49:39","guid":{"rendered":"http:\/\/blog.lawyer.com\/?p=229"},"modified":"2020-07-28T12:06:09","modified_gmt":"2020-07-28T16:06:09","slug":"2012-03-07-how-prevalent-are-ponzi-schemes","status":"publish","type":"post","link":"https:\/\/blog.lawyer.com\/index.php\/2012-03-07-how-prevalent-are-ponzi-schemes\/","title":{"rendered":"How Prevalent Are Ponzi Schemes?"},"content":{"rendered":"
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Ponzi schemes are difficult to unravel, not unlike a billion-piece puzzle.<\/figcaption><\/figure>\n

Ponzi schemes have been in the news recently, but not for bad reasons. \u00a0Specifically, proposed and confirmed settlements of three big ponzi schemers have been reached with some of their victims. \u00a0The victims of Earl Jones, a convicted\u00a0Qu\u00e9b\u00e9cois\u00a0schemer who swindled an estimated $40 million from 150 people<\/a>, have settled in a class action suit with his bank for about $18 million. \u00a0The late Kenneth Wayne McLeod, whose Capital Analysts Inc. group stole $34 million mostly from federal agents and policemen, has proposed settlement for an undisclosed amount with 140 investors<\/a> (though not without some suspicion, as noted in that article). \u00a0And perhaps biggest of all, though not Madoff-big, is Scott Rothstein, the big-mouthed Florida lawyer whose Charlie-Sheen-esque ramblings during a deposition were something of a pop culture phenomenon last year. \u00a0He made off with $1.2 billion of investors’ money, with his bank recently settling for $170 million for its part in the scheme<\/a>.<\/p>\n

While reading this, I became curious as to how prevalent these Ponzi schemes are. \u00a0Presumably after Bernie Madoff made headlines with his $65 billion scheme, duping even high-profile celebrities and financial leaders, people would be more aware of what they were doing with their money. \u00a0However, Ponzi schemers are just as active as ever. \u00a0This list on Wikipedia<\/a> shows 32 caught Ponzi schemers in the last decade alone — some with schemes going back ten years or more. \u00a0Just think about how many are perpetrating a fraud right now.<\/p>\n

Read on to learn about common investment fraud tactics after the jump.<\/p>\n

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Investment sometimes seems like a magical opportunity. \u00a0Give your money to someone, and in a year or two get it back plus a lot more. \u00a0Little to no work on your end, with all the benefit. \u00a0If you’re looking to invest your money and want to avoid schemers, use a little common sense and be aware of common tactics by con men. \u00a0If someone approaches you with a deal that seems too good to be true, it most likely is. \u00a0Rothstein promised his investors 20-30% returns in as little as a month — not just unlikely, but nigh impossible, which a little research would reveal.<\/p>\n

Additionally, be wary if you’re approached at all with an “exciting business opportunity” that has a limited-time deadline. \u00a0Con men often use this approach, relying on the pressure of time to limit your ability to think straight and fact check. \u00a0Always take time to think, because a\u00a0legitimate investment will always give you plenty of time to do your research. \u00a0Rothstein’s scheme was based on structured settlements which turned out to be fabricated entirely. \u00a0But if you think about his proposal, which was that philandering husbands confronted with a sexual harassment suit would pay off money into an immediate “settlement”, it appears on the face of it to be a simple bribe.<\/p>\n

Of course, hindsight is 20\/20, so the most important thing to be aware of when choosing an investment is that good investors have good references. \u00a0A career financial analyst with hundreds of people who can attest to his\/her success is much more trustworthy than a clientless lawyer with no reputable references and a half-baked idea about illegal settlements. \u00a0Also, a third-party, such as a trusted banker or independent analyst (someone not<\/em>\u00a0provided by the propositioner) will be able to verify the investments.\u00a0 In short: before handing someone your money, be absolutely certain that they are trustworthy.<\/p>\n

More about Ponzi schemes:<\/p>\n