What is a Ponzi scheme?

There are many types of white collar crimes that involve some form of fraud. Ponzi schemes are one of these.

When discussing criminal activity, the minds of many Floridians first go to violent crimes such as homicide, assault, rape, burglary and others. Some vehicular crimes like driving under the influence of alcohol or drugs may also be thought of. However, there are a great many acts that are considered to be crimes but that have no similarities with any of the above crimes.

The world of white collar crimes

Known as white collar crimes, these acts generally involve professional people in business settings. The alleged crimes often pertain to some attempt to gain a financial advantage on the part of the defendants. A Ponzi scheme is one form of white collar crime that involved investments and promised high rates of return. They can result in federal charges being levied against alleged perpetrators.

The U.S. Securities and Exchange Commission indicates that in a Ponzi scheme, a business person seeks financial investors for a venture. As is typical with any investment situation, some financial return is promised. With a Ponzi scheme, that rate is often higher than what would be considered normal.

The fraud occurs when the person requesting the investments takes invested monies for personal gain rather than putting them into the business as promised. Many legitimate business operations have structures and models similar to those of Ponzi schemes, putting some innocent people at risk of being wrongly accused of fraudulent behavior.

Some examples from the news

To better illustrate the point and what consequences defendants may face, following are some examples of Ponzi schemes from news sources:

  • The Review Journal provided details on sequential jail terms that were ordered for a couple from Oklahoma accused of running a Ponzi scheme. The sentence was developed to allow one parent at a time to remain home to care for their children.
  • A Bitcoin business originally promised investors an 11 percent weekly return. When that was not realized, an investigation was launched that led to a potential prison sentence of 40 years total for two different charges according to Forbes.
  • The Dallas Morning News reported on a Missouri-based company that marketed funeral services as pre-paid options for use when needed later. However, the monies were never actually provided and some insurance companies have been forced to honor the agreements nonetheless. The man allegedly responsible for the plan could be required to financially compensate victims and spend up to nine years in prison.

These examples clearly highlight the serious consequences that can be faced when Ponzi scheme allegations are made.

What defendants should do

Anyone facing potential criminal charges for fraud of any sort, including a Ponzi scheme, deserves help and a good defense. Contacting a lawyer as soon as possible is recommended.

Keywords: Ponzi scheme, fraud, white collar