How do you spot a Ponzi Scheme?

A Ponzi Scheme is a well-known white collar financial crime. More specifically, it is an investment scam that promises high returns to investors. Perhaps even more alluring is the allegedly low risk associated with the investment. In the early stages of a Ponzi Scheme, these claims may appear to be true, making the “opportunity” all the more enticing. However, there is one large caveat–such returns are unsustainable, and the scheme will ultimately collapse.

A Ponzi Scheme generates its returns by acquiring funds from a flow of new investors. This new money is then given to the older investors, seemingly as returns from their successful investment. The cycle continues for as long as possible, until there are no new investors to add money to the scheme. At this point, the Ponzi Scheme runs out of money and falls apart, leaving the remaining investors with no returns. The Ponzi Scheme originated in 1919, first orchestrated by a man named Charles Ponzi. Since then, countless others have pulled off similar investment scams, with some losses totaling over $50 billion.

Red Flags of a Ponzi Scheme

Fortunately, nearly all Ponzi Schemes share similar characteristics, allowing you to more easily identify them.

  • Very high returns guaranteed
  • Little to no risk of losing money
  • Investments not registered with the SEC
  • “Proprietary” or “secret” investing strategies
  • No real paperwork available
  • Difficulty withdrawing invested money

What Happens if You are Caught?

Penalties for running a Ponzi Scheme can range from a misdemeanor charge to a felony, depending on the nature and size of the crime. Those guilty may be subject to prison time, probation, large fines, community service, restitution, and mandated community service. Further, your business assets may be frozen. Depending on the crime, you may be investigated by federal agencies such as the Federal Trade Commission (FTC) and the US Securities and Exchange Commission (SEC).

Contact an Experienced White Collar Crimes Defense Attorney

Getting accused of orchestrating a Ponzi Scheme can be a frightening experience. To further discuss the penalties associated with Ponzi Schemes, contact a white collar criminal defense attorney. An experienced attorney can help to come up with a plan of action, and strategize how to best portray you and your case.

Is it Still Embezzlement if I pay back the Money?

White collar crimes refer to financial crimes that are committed in a “white collar” or corporate setting. White collar crimes include fraud, insurance fraud, money laundering, racketeering, embezzlement, Ponzi schemes, and other financial crimes. One of the most common white collar crimes is embezzlement. Embezzlement is committed when a person that has access to company funds takes some of the money for themselves, but does not record it. The crime of embezzlement belongs to the theft crime family. The difference between embezzlement and theft is that in the case of embezzlement, the person has access to the funds they stole. In a theft case, the person does not have access to the funds they stole.

If you are found guilty of embezzlement charges, the penalties can include jail time, fines, and restitution. The penalty for embezzlement is dependent on the severity of the crime, the state the crime was committed in, and the number of funds that were stolen. If you are being charged with embezzlement, you are going to need an experienced white collar crimes defense attorney. An experienced attorney will develop a strategy to get you the justice you deserve.

What if I Give the Money Back?

If you are found guilty of embezzling funds from your employer, the judge will most likely order you to pay restitution. Restitution is when the defendant is ordered to pay back the stolen funds. This usually comes along with other penalties, like a fine and/or prison sentence, as we mentioned before.

If you pay back the money before you are found guilty, the court will usually hand down a lighter punishment. If you are caught red handed, your white collar defense attorney may use this as a strategy to avoid jail time. Even though you returned the funds before you were charged, you still performed the crime, therefore, you must be charged as so.

Contact an Experienced White Collar Crimes Defense Attorney

The best thing to do if you are being accused of allegedly committing embezzlement is to contact an experienced criminal defense attorney. A criminal defense attorney will put together a comprehensive strategy that will represent you in the best light.