Many Ponzi schemes are reported in the press, and often on the website of the Securities and Exchange Commission. Often, Receivers appointed by the Court in an SEC case will place the Ponzi company in a bankruptcy. After a financial audit is complete, the Receiver will communicate with the victims of the Ponzi via letters and a website.1 As part of the bankruptcy process, the debtor will have to file schedules with the court, which includes a list of its known creditors, and whether the claims are liquidated or unliquidated.
The bankruptcy schedules are easily downloaded from the Public Access to Court Electronic Records (PACER).2 One obviously must follow the local ethics rules to see whether targeted mailings are allowed to alert the investors to the attorney’s willingness to help them make a recovery in the Ponzi scheme case.
Another common method to find the victims of the Ponzi scheme is the internet. It is quite common for attorneys to publish blogs or even public relations releases about the Ponzi scheme, netting them searchable by the victims who are looking for information on the Ponzi scheme.
Another common technique is to take out an advertisement in the local paper where most of the Ponzi schemes are located. Moreover, sometimes victim lists are published in the receivership action. If the Receiver locates assets that are available for distribution, the Receiver will file a motion with the Court to approve the amount of the distribution.
The motion is normally accompanied by a list of the investors, the amount of their investment, and the proposed distribution. Again, the practitioner is cautioned to carefully follow local bar rules on targeted or general advertising to the victims, who sometimes can make a recovery outside of the receivership.