You’ve probably heard of a Ponzi scheme, but do you really know what it means? Let’s go over what a Ponzi scheme is and the potential criminal charges that may be filed in connection to this type of business.
Ponzi Scheme Fraud
Ponzi schemes are a type of investment fraud. This is when a business or person promises high financial returns for individuals who invest in certain companies. However, the financial returns are actually from past investor payments. Eventually, once this model becomes unsustainable, the business person may disappear with the remaining funds.
Why is it Called a Ponzi Scheme?
This type of fraud is named after the first person to do it, Charles Ponzi. Charles was a man from Boston, MA who promised his investors a 50% return, ultimately disappearing with some of the money invested. He was eventually found, convicted, and imprisoned, and thus, the Ponzi scheme had been created.
Ponzi Scheme Versus Pyramid Scheme
Ponzi and pyramid schemes are quite similar in that they both involve investment fraud. However, pyramid schemes usually involve numerous parties who are offered high returns on investment and the ability to make money if they recruit more people to join the ‘business.’ Many people may join pyramid schemes with good intentions, not knowing they have teamed up with a fraudulent organization.
Criminal Penalties for Ponzi Schemes
If you are found guilty of running a Ponzi scheme, you could face numerous charges.
You may be charged with:
- Wire fraud
- Investment fraud
- Bank fraud
- Mail fraud
- Tax evasion
- Other financial crimes
As a result, you could be fined thousands of dollars and sentenced to prison time.
Florida Fraud Criminal Defense
If you have recently been charged with fraud in connection to a Ponzi scheme, contact our team at Jeffrey S. Weiner, P.A.. We have helped numerous clients facing federal and state fraud charges. Get started with our firm by filling out our online consultation request form or calling us at (305) 985-6640.