What Type of Criminal Charges Are Involved in Ponzi Schemes?

ponziPonzi schemes have become famous after news was made of Dona Branca’s scheme, the “Double Shah” and of course, the original Charles Ponzi scheme. Still, even though Ponzi schemes often make the news, few people really understand what they are, and what is at stake if they are charged with running such a scheme. Learn more about Ponzi schemes below, what types of criminal charges are involved, and what to do if you are charged.

What Is a Ponzi Scheme?

Ponzi schemes are considered white-collar crimes that typically involve some type of fraud. They are not violent crimes, but they are not what some call ‘victimless’ either, because these schemes do defraud people out of their money.

A Ponzi scheme will involve an investor that convinces people or groups of people to invest a large amount of money with them in the hopes of obtaining a large return on that investment. The money paid by these individuals is then distributed to others that have also been convinced to invest. The majority of the money collected from investors is kept by the person or group running the scheme.

Usually, the scheme is discovered when an investor wants to cash out, but they do not receive any payments because no new investors have been brought into the scheme.

Ponzi Schemes and Criminal Charges

Due to the fact that Ponzi schemes typically include some type of fraud, a person may face several charges if they are suspected of running such a scheme. The most common of these include:

  • Mail fraud, if the government suspects a person used the postal office in an effort to further the scheme
  • Securities fraud, including violations of the Securities Exchange Act of 1933, and the Investment Company Act of 1940
  • Securities and commodities fraud, which involves using promises to secure money for a commodity deliver occurring in the future

A number of federal agencies may investigate suspected Ponzi schemes, depending on the nature of the offense. It is important to understand the agencies that may investigate potential Ponzi scheme cases, so you can better understand if you are under investigation.

The Federal Trade Commission will investigate any scheme that involves securities and commodities fraud, while the Securities and Exchange Commission will investigate any scheme that involves securities fraud. When a suspected scheme involves a significant financial crime, the Financial Fraud Task Force may also investigate. The Task Force is composed of 94 U.S. Attorney’s Offices and 20 federal agencies that specialize in offenses involving fraud.

Our Chicago Criminal Defense Lawyer Is Here to Help

Like all federal charges, the penalties for running a Ponzi scheme are harsh for those convicted. At the Law Offices of Hal M. Garfinkel, our skilled Chicago criminal defense lawyer can help. Attorney Garfinkel understands that federal prosecutors are sometimes overzealous when investigating these cases, and that innocent people are often charged. He also knows the best defenses and will use them effectively to give you the best chance of retaining your freedom. If you or a loved one has been charged, call us at 312-270-0999 or contact us online to schedule a free consultation.

Source:

https://www.justice.gov/archives/jm/criminal-resource-manual-940-18-usc-section-1341-elements-mail-fraud

This entry was posted in Fraud, White Collar Crime and tagged , , , , . Bookmark the permalink.

225 WEST WASHINGTON STREET, SUITE 2200A, CHICAGO, IL 60606

PHONE: 312-270-0999

FAX: 312-924-0201