How to Know if You’re a Victim of a Ponzi Scheme

Ponzi schemes are, unfortunately, one of the most common types of investment fraud within the securities industry. Many investors trust that their brokers do their due diligence before recommending investment opportunities; others may not have the time or experience to do their own research before taking a chance on an investment that sounds promising. 

However, this lack of research is often what these schemers are counting on to take advantage of investors such as you. Below, we go into greater detail about what a Ponzi scheme is, the signs you can look out for, and what legal options may be available if you become a victim of a Ponzi scheme.

Signs of a Ponzi Scheme

The crux of a Ponzi scheme is as follows: the head of the scheme pays investors with the money invested by new investors. Once the fraudster is unable to continue paying back investors, the scheme falls apart and investors are out their money. 

There are a couple of ways that you can tell that an investment “opportunity” is anything but. If you notice any of the following when discussing the investment, it may be in your best interests to steer clear:

  • Promise of high returns with little risk
  • Complicated strategies
  • Trouble receiving returns
  • Inconsistent returns
  • Unregistered or unlicensed sellers
  • Unregistered investment

Fortunately, you may be able to recover your investment losses after falling victim to a Ponzi scheme in certain circumstances. 

Legal Options If You Suffered Investment Losses

Although the head of the Ponzi scheme should certainly be held accountable and compelled to repay the investors they conned, you may also have a strong case against your financial advisor. 

Stockbrokers have an obligation to do their due diligence before presenting investment opportunities to investors. If they failed to do so and you lost money in a Ponzi scheme, they can also be held accountable in arbitration with the Financial Industry Regulatory Authority (FINRA). 

FINRA arbitration gives you the chance to present the evidence you have against your financial advisor in a timely manner so you can potentially recover your losses more quickly than if you waited to go through a lengthy court process. In your hearing, the respondent will also have the opportunity to justify why they chose this investment and their failure in identifying it as a Ponzi scheme. 

Your investment loss lawyer will need to carefully examine the details of your case to determine which avenue makes the most sense for your case. 

Discuss Your Case with an Investment Loss Lawyer

If you suspect that you have been a victim of a Ponzi scheme,  or if you know you have endured significant losses due to a Ponzi scheme, contact a reputable investment loss lawyer at Wolper Law Firm, P.A.. Call us at 800.931.8452 or submit the convenient contact form located at the bottom of this page when you are ready to schedule your free, confidential case review. 

Attorney Matthew Wolper

Attorney Matthew WolperMatt Wolper is a trial lawyer who focuses exclusively on securities litigation and arbitration. Mr. Wolper has handled hundreds of securities matters nationwide before the Financial Industry Regulatory Authority (FINRA), American Arbitration Association (“AAA”), JAMS, and in state and federal court. Mr. Wolper has handled and tried cases involving complex financial products and strategies ranging from traditional stocks and bonds to options, margin and other securities-based lending products, closed/open-end mutual funds, structured products, hedge funds, and penny stocks. [Attorney Bio]