Federal Pyramid and Ponzi Schemes
A Ponzi scheme really has to do with somebody who is marketing certain things — whether it be a Hedge Fund, some sort of a real estate transaction — there's all sorts of different concepts which are being used, basically trying to convince investors that they can get a huge return for their money.
A lot of times these white collar crimes of ponzi or pyramid schemes can net the person who's in charge of them, thousands, hundreds of thousands, even millions of dollars.
Basically, where the problem lies with these Ponzi schemes and where the rubber will meet the road as far as the federal government determining whether a crime has been committed is, when the person who's in charge of the Ponzi scheme is doling out the alleged benefits.
In other words, the dividends from the person's investment. If they are taking those dividends from new investor money versus actual money that's made form this supposed scheme.
Let's say it's a real estate investment and houses are being built, people are buying the houses and money is coming into an account and those dividends are being used dividends to other investors — that would be okay, as long as there's money being made and it's a legitimate situation where the money is being invested in something and there's an account set up.
Criminal Investigation for a Ponzi Scheme
But usually where you get into the Ponzi scheme situation is where someone is claiming they set something up that you really can't verify and they're taking in new investments and in order to keep the Ponzi scheme afloat.
They're giving some of the money from the new investors to the old investors in order to keep them happy because they're making dividends. Let's say a Ponzi scheme takes in 100 million dollars and they pay out to investors to keep the scheme going, say 30 million.
There's a 70-million-dollar profit right there, and that money usually goes into the pocket of the person who is in charge of the Ponzi scheme.
A lot of this is common sense. I've sat down with clients who have been involved with Ponzi schemes as they try to explain what they were doing and what they were thinking and sometimes what is explained makes sense.
If they can verify that there's actually a legitimate account and money is being made and the money that is being made is being used to pay investors, now we're in a position where we may have a defense to this whole Ponzi scheme scenario.
It's one thing if you set up everything the right way, explain it to people, set up the business accounts and you're not siphoning the money out of those accounts and you're doing all the things the right way, and somehow whatever the venture is loses money, that would be unfair to characterize that scenario as a Ponzi scheme because sometimes you invest and you're not successful.
Review of Evidence to Determine Best Defense Strategy
You're going to have to do things the right way as the owner of that business who's taking people's money. You're going to have to sign agreements. Part of the agreements are going to need to say that there's a possibility that they're going to lose their money and explain that very clearly to them.
We're going to have to be able to trace where the money is going. We're going to have to be able to show that there's actually some sort of an investment there — whether it be real estate, Hedge Fund — whatever the case may be.
We're going to have to be able to show that profits are being made, and as those profits are being made, money is being doled out to investors and that we're not just taking in new money in order to pay investors on previously-deposited money. That would be wrong.
That is a pyramid scheme where money just keeps coming in, you keep getting new investors and eventually that comes crashing down. People are arrested. Money is owed. Usually thousands of dollars are lost in that scenario.
So, if you or a loved on is charged or alleged to be involved in a Ponzi or pyramid scheme at the federal level, the federal government has come in and seized your books, seized a bunch of other things, maybe arrested or or maybe not arrested you.
Maybe it's a pre-indictment situation where you either know you're being investigated because you've heard information — you have a bunch of mad investors, or because the government has come in and seized certain records.
They're looking to figure out some of the things I'm talking about related to whether or not you've really set things up the right way, the legitimate way, to be able to block you from arguing that you're doing something lawfully versus unlawfully.
Federal Criminal Defense Lawyer
A lot of times they'll conduct a Grand Jury hearing. They'll subpoena either you or a bunch of information — bank accounts, etc. — from you so they can start the process of determining whether or not whatever it is you're involved with is legitimate.
Once you see this, you'd better get an attorney right away because you want the attorney to act as a buffer between you and the feds and to make sure that you make the right moves moving forward so that you don't put yourself in a position where you get into more trouble and you make it easier for the government to prosecute you.
So, if you're either being investigated or being charged with some sort of a Ponzi or pyramid scheme at the federal level, pick up the phone now. Ask to speak to Ron Hedding. We'll sit down and we'll get this case moving in the right direction.