What is a Ponzi scheme?

On Behalf of | Feb 14, 2020 | Criminal Defense |

Many crimes can fall into the category of white collar crimes. You will notice that these crimes often happen on a large scale and always involve a financial aspect. This category includes embezzlement, fraud and Ponzi schemes. Ponzi schemes have been around for a long time. In fact, the U.S. Securities and Exchange Commission explains the name comes from Charles Ponzi, who scammed investors in the 1920s.

If you are accused of running a Ponzi scheme or some other white collar crime, you need a knowledgeable defense. It is critical that you contact a skilled criminal defense attorney who can build a strong defense for your charges.

Understanding a Ponzi scheme

A Ponzi scheme is a type of investment fraud. Someone will approach an investor and ask them to invest in a company that will help them see quick returns and a lot of money. Once a person invests in the scheme, the person running the scheme takes the money and gives it to someone who previously invested, acting as if this is a return from their investment. However, what is really happening is that the person running the scheme never invests any money and just pays each old investor with the money from new investors.

For this scam to work, there always has to be new investors. Once people figure out the scam, they stop investing. Those who invest later in the scheme end up losing out and none of the investors see any more returns.

What should you do if you are accused of running a Ponzi scheme?

Unfortunately, some white collar investigators are quick to accuse someone of running a Ponzi scheme even though their business is legitimate. Additionally, the criminal investigators or the investors may not have all the details about how your business works. Because of this, it is highly recommended that you hire a white collar criminal defense attorney who can protect your rights and freedom.

At Frasier & Griffin, PLLC, we defend our white collar clients from criminal charges. Our defense attorneys will handle the communication with investigators and will work to protect your future.