Steps to Take When Reporting a Ponzi Scheme
As explained by the Securities and Exchange Commission (SEC), a Ponzi scheme is a form of investment fraud in which the perpetrators pay old investors their ‘returns’ with the money contributed by new investors.
Though investors often show impressive returns in their printed account statements, those returns exist only on paper.
The unfortunate reality is that a Ponzi scheme operator simply shuffles money around. Once new investor contributions run out, the entire fraud scheme collapses in on itself.
How do I report a Ponzi scheme? Sophisticated Ponzi schemes can be difficult to detect. In some cases, investors may not realize that they are involved in a Ponzi scheme for years or even decades after their first contribution. As soon as you suspect that there is a problem, you need to report the fraud.
Here, our top-rated Ponzi scheme lawyers explain the various options for reporting a Ponzi scheme.
Learn Your Rights
If you’ve suffered significant losses in your investment accounts, talk to a lawyer who will explain your rights and options, free of charge.
What You Need to Know About Reporting a Ponzi Scheme
Federal Law Enforcement
To operate a Ponzi scheme, the perpetrator almost invariably violates criminal statutes. For example, Bernard Madoff, the man who pulled off the largest Ponzi scheme fraud in American history, is now serving 150 years in prison.
In most cases, Ponzi schemes violate federal law. For this reason, victims can submit a tip to the Federal Bureau of Investigation (FBI). The FBI can start to put an investigation into motion.
Beyond criminal law enforcement agencies, Ponzi scheme victims should also report the fraud to state and federal securities regulators. In the overwhelming majority of cases, Ponzi schemes violate SEC regulations. You can submit an SEC tip regarding your Ponzi scheme case online.
You can also fax information to the agency’s whistleblower office at (703) 813-9322. Depending on the specific circumstances of your case, you may also want to submit a complaint to the top securities regulator in your state.
If you were the victim of a Ponzi scheme that was committed by a financial advisor who is associated with a registered FINRA broker-dealer, you should raise your complaint to the compliance department at that brokerage firm. In certain cases, that brokerage firm may be legally liable for part or all of your financial losses. It is important to make sure that they are notified regarding your complaint.
However, it is not recommended that you reach out to a brokerage firm directly until after you consult with an experienced investment fraud lawyer. Unfortunately, the brokerage firm may try to ‘cover its tracks’ once they realize serious financial fraud occurs.
It is crucial that you have an experienced Ponzi scheme attorney by your side who can make sure that your case has been properly assembled and that your rights receive proper protection.
Get Yourself Organized: Gather All Documents and Records
Once you suspect a problem with your financial advisor or brokerage firm, you need to take immediate action. One of the very first things that you should do is to carefully gather all related documents and financial records. The more evidence you have in your possession, the better off you will be in the claims process.
Anything that is even tangentially related to your relationship with the Ponzi scheme or its perpetrators must be saved. Among other things, you should assemble:
- Bank records and account statements;
- Any marketing or sales materials that you received;
- Correspondence between you and the Ponzi scheme operators; and
- Contemporaneous notes that you took.
You Need Professional Legal Guidance
If you lost a substantial amount of money in a Ponzi scheme, or in an investment that you now suspect is a Ponzi scheme, you need professional legal representation. Ponzi scheme claims are extremely complex.
Our top-rated Ponzi scheme lawyers have the skills and experience needed to effectively present your case so that you can prove liability and make the maximum financial recovery.
Were You the Victim of a Ponzi Scheme?
Our legal team is here to help. At Sonn Law Group, we have deep experience representing investors in a wide range of Ponzi scheme-related fraud cases. Our founder and lead attorney Jeffrey R. Sonn has appeared on CNBC as a contributing expert commenting on the Bernard Madoff Ponzi scheme case.
If you or a loved one lost money in a Ponzi scheme, please do not hesitate to contact our law office today for free, fully confidential legal guidance. We will help you determine exactly what you need to do next to protect your rights, including reporting the Ponzi scheme to the appropriate authorities.