The Top 5 Ponzi Schemes in the United States

- - Business, Legal

A Ponzi scheme is a way for a person who claims to be investing money for you turn around and pays previous investors and not from the profits of the company or stock. The SEC defines investment fraud as “Investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors.”  This is exactly that the top 5 Ponzi schemes have in common and in today’s article we will be discussing them.

What are some of the top Ponzi schemes?

The first Ponzi scheme ever to make the news was started by a man names Charles Ponzi.  His rouse started with the promise of doubling their profits in 90 days.  He thought by buying a kind of stamp in Italy then cashing them in here in the US for more money would make him a lot of profit.  It did not work out the way he hoped, but he never told his investors that and kept bilking them out of money to pay off the older investors.  Finally after a long time of stealing money the media and local enforcement took notice, but it was too late for many, 6 banks had to be closed and 20 million dollars were gone from investors.  Next, we have the Bernie Madoff Ponzi scheme.  This is a man who was under the radar for over 50 years, using his company to mask his Ponzi scheme. He would take new investors’ money to pay off his original clients and even went so far to make up fake investment reports for years so no one would suspect anything.  His own sons ended up turning him in and losses were totaled over 18 billion dollars.

Are there anymore examples?

In the 1980’s a company named David& Company bilked 200 millions of dollars out of investors and eventually he did return 120 million of the money.  He pretended to sell commodities and stocks and the reality of his scheme hit a lot of business people from California hard and many lost all of their money in this scheme.  He was sentenced to 20 years in prison, was paroled after 10 and died in 1999.  Next, we have the James Davis Rasher who took 21 million dollars from unknowing investors from 2007 to 2010. He had many operations over the United States, and many were FINRA registered. He had previously been convicted of securities fraud twice. Because of this crime he was ordered to spend 20 years in prison.  Lastly, we have Scott Rothstein, who was a lawyer and was CEO of Rothestein Rosenfeldt Adler law firm which took over 1.4 billion dollars from investors to help pay for the older investor fees instead of investing them the right way.  He was sentenced to 50 years in prison, even though the prosecutor only asked for 40.

Stealing money through Ponzi schemes has been happening for many years and I hope these stories can show us what to look for in a bad investment.

If you ever fall into a investment fraud dont fight the battle alone, get professional advice from investment fraud lawyer like Timothy j O Conner to ensure you have a good chance to recover your investment.

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