A Ponzi scheme is a type of investment scam in which returns are paid to earlier investors using the funds contributed by new investors, rather than through legitimate profits from the investment. The scheme’s promoter will promise high rates of return on investment, but, the returns are paid out of the money collected from new investors, rather than from any actual profit earned from legitimate business activities.

If you’ve been the victim of a Ponzi scheme, it’s important to know that it is often possible to bring an action to recover the money you’ve lost. Call MDF Law PLLC for a free consultation at 800-767-8040 to discuss how your file your claim.

Ponzi Scheme Warning Signs

Warning signs that an investment may be a Ponzi scheme may include:

  1. High returns with low risk: Ponzi schemes often promise consistently high returns, regardless of market conditions or economic changes, and with little or no risk to the investors.  Promoters of ponzi schemes will sometimes claim that the investment is “market-neutral.”
  2. Lack of transparency: Ponzi schemes may not provide clear or verifiable information about the investment strategy, where the funds are being invested, or how returns are being generated. Investors should never invest in an investment that they do not clearly understand.
  3. Unregistered investments: Ponzi schemes may not be registered with regulatory authorities, or may be sold as unregistered securities.  Investors should check with the Financial Industry Regulatory Authority, or FINRA, to confirm whether they are dealing with a licensed securities salesperson and if the investment is registered.
  4. Pressure to invest: Ponzi scheme promoters may pressure investors to invest quickly, often emphasizing that the opportunity is limited, exclusive or time-limited. 
  5. Overly complex investment strategies: Ponzi schemes may use complex or vague investment strategies that are difficult for the average investor to understand.
  6. Issues with payments: The scheme may miss payments, offer excuses or delays in payments, or offer various reasons why investors are unable to access their money.
  7. Lack of independent verification: Ponzi schemes may not provide independent financial statements or have independent auditors verify their financial records.

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