About MLM's Ponzi Schemes Pyramid Schemes
- Bonsignore Trial Lawyers, PLLC
A financial fraud attorney is a lawyer who can help victims of the wide variety of financial frauds pursue compensation. For example, unlawful MLM’s, pyramid, and Ponzi schemes are all fraudulent investment programs that have little to no legitimate revenue. Returns are paid using new monies coming in from new investors. Many times, financial frauds impact tens to hundreds of thousands of similarly suited victims.
With rare exception, the criminal justice system and the bankruptcy court are not able to return the money swindled from the victims. Civil class action trial lawyers who focus on unlawful MLM’s, pyramid, and Ponzi schemes represent the last best chance to make financial fraud victims whole. The road to recovering such monetary losses is complex, tricky and filled with traps for the unwary. It is not a practice area where dabblers will have success. Bonsignore Trial Lawyers focus on recouping money lost as a result of financial fraud, including unlawful MLM’s, pyramid, and Ponzi schemes.
Bonsignore Trial Lawyers have great experience and great success holding wrongdoers liable for their part in financial frauds and returning lost funds to individuals and businesses. For example, BTL fought for their clients for over ten (10) years, and as of December 31, 2024, returned approximately $130,000,000.00 ($130 million) dollars to the 580,000 victims of TelexFree’s fraud based and unlawful MLM pyramid, and Ponzi scheme.
MLM, PYRAMID AND PONZI SCHEMES AND OTHER INVESTMENT SCAMS
Many MLM’s, pyramid, Ponzi schemes and other fraudulent investment scams are committed by unscrupulous fraudsters who take advantage of trusting and unsuspecting individuals and businesses. Such financial fraud has been on the rise and has been a major problem in the United States for over a decade. The sophistication of successful financial fraudsters is astounding. The average person or business is often no match for them.
In 2023, consumers in the United States lost a record $10 billion to financial fraud, which was a 14% increase from 2022. This was the first time that consumers reported losing more than $10 billion to fraud in a single year.
New research reveals that three (3) in ten (10) U.S. consumers or their household have lost money to scams since 2020 with identity theft. The average amount of money lost by victims of fraudulent investment scams is $545 with more than one in ten (13%) victims losing over $10,000 00.
Many seniors have spent years saving and investing, which is a great way to achieve financial security – but also makes them targets for investment fraud. According to the Federal Trade Commission, adults 60 and older reported losing more than $1.9 billion to fraud in 2023, up from $1.6 billion in 2022. Older adults were 60% more likely than younger ones to report losses exceeding $100,000 last year, according to the FTC. In 2023, about 4,600 adults age 60 and older reported being defrauded of a six-figure sum, according to a report the Federal Trade Commission report issued in October 2023, up from about 1,300 in 2020.
Fifty-nine percent (59%) of fraudulent investment scam victims say enhanced fraud detection and monitoring technologies are the most important safeguard to tackling fraud and financial crime.
Bonsignore Trial Lawyers believe that holding those who assist and profit from fraudulent investment scams accountable is the only effective way to slow or stop the record financial losses suffered by 3 in 10 United States households.
Experience tells us that holding the fraudsters and all who aided and abetted them, or who were otherwise unjustly enriched, accountable is the only realistic solution to this societal problem that hurts so many. In law, this concept is known as deterrence.
WHAT IS AN UNLAWFUL MLM’S, PYRAMID, AND PONZI SCHEME
Fraudulent financial investment scams are often classified as securities fraud. Investors rely on the false representations that their investment will pay a returns generated by a legitimate business operation.
Fraudulent financial investment scams organizers often promise to provide an opportunity that generates high returns with little or no risk. Fraudulent financial investment scams organizers also often guarantee a passive return, meaning after you give them your money you are guaranteed a significant profit in exchange for doing nothing or next to nothing.
Fraudulent financial investment scams organizers will go to elaborate lengths to appear legitimate. For example, they will shower the investment with credibility by associating licensed professionals such as lawyers and CPA’s, they will associate themselves with major banks or other larger businesses, and they will parade the testimonials of persons who greatly profited.
Fraudulent financial investment scam organizers also fabricate elaborate marketing plans, make use of technical jargon or call-in experts in a field related to the scam to offer false praise.
Fraudulent financial investment scams generate little or no legitimate earnings and so, require a constant flow of new money to survive. In addition to taking money from investors, Fraudulent financial investment scam organizers use new money to pay those who invested earlier. Sooner or later Fraudulent financial investment scam always collapse.
EXEMPLAR WARNING SIGNS OF A POTENTIAL PONZI SCHEME
Many unlawful MLM’s, pyramid schemes, Ponzi schemes and other financial frauds include common characteristics. For example:
- Promises made by unlicensed security dealers: Many MLM’s, pyramid, Ponzi schemes and other fraudulent investment scams are operated by persons who do not possess a license to sell securities. To sell investment opportunities, securities dealers must undergo extensive training, become licensed, and their sales and conduct is regulated by the government to protect investors. They are issued licenses.
- Investments are not registered with the SEC or state regulators: Many MLM’s, pyramid, Ponzi schemes and other fraudulent investment scams offer investments that are not registered with state or federal government. Securities investments must be registered.
- Promises of a high return with little or no risk: Many MLM’s, pyramid, Ponzi schemes and other fraudulent investment scams promise that there is little to no risk to participants. They also promise high returns. All investments carry some risk. The higher the return, the higher the risk.
- Guaranteed passive return: It is unlawful in most states to guarantee a profit on a passive investment. Investments fluctuate over time. Passive investments – those that obligate you to do nothing or next to nothing – cannot guaranteed a profit.
- Complex payout calculations and strategies: Many MLM’s, pyramid, Ponzi schemes and other fraudulent investment scams devote considerable assets and resources to dazzle potential investors with complex payout calculations and strategies. Investment advisors must give you complete, clear information in writing.
- Difficulty receiving payments: Many MLM’s, pyramid, Ponzi schemes and other fraudulent investment scams act to deter or prevent participants from cashing out. For example, offers to pay an even higher return for not withdrawing money is not uncommon.
- Payment by Bitcoin, Veno or Zelle- Many MLM’s, pyramid, Ponzi schemes and other fraudulent investment scams ask participants to make a payment by going to a bitcoin ATM, buying gift cards, sending a wire transfer, or sending money through a peer-to-peer transaction on a platform like Zelle or Venmo. They do so because these payment methods have no fraud reimbursement system. Using one of these forms of direct payment (Zelle, Venmo or a bitcoin ATM) is the same as handing over cash.
WHAT SHOULD I DO IF I SUSPECT IVE BEEN SCAMMED?
If you suspect you have been victim to an unlawful MLM, pyramid scheme, Ponzi scheme, or some other fraudulent financial investment scam there are steps to protect yourself and your assets. The same is true if the worst occurs and the financial fraud has collapsed.
First, immediately gather all documents and information related to your investments, the overall program, and all else. This information gathering and preservation should include all correspondence between yourself and others, records of payments in and payments out, promotional materials, screen shots/print outs of your accounts, handouts, marketing materials and all else.
Once you print or electronically store this information, make two copies and store them somewhere you know is secure. Store copies in different locations, label them and mark them “DO NOT DISCARD OR DESTROY”.
Even if you can take screen shots of every electronic page relating to your account and the business, send emails to confirm facts that do not appear in your record or on the business’s website.
You may be able to recoup your losses, but this can be complicated and challenging. As soon as possible, involve an attorney who is experienced and successful in prosecuting fraudulent financial investment cases. Ask each lawyer you consult with about their experiences and success in handling unlawful MLM, pyramid scheme, Ponzi scheme, and other fraudulent financial investment cases. Ask how many depositions they have taken and how many briefs they have written in such cases. Ask what experts they have previously retained and what kind of experts they foresee retaining to prosecute your cause.
Bonsignore Trial Lawyers have taken the testimony of dozens of deponents and trial witnesses, authored dozens of briefs, have worked with Ponzi/Pyramid, banking, pay processing, forensic accounting, and many other case specific experts. We are fully versed in what facts to look for, what legal theories work and don’t work, what experts must be retained and more. Our team is experienced with representing victims and can get to work immediately, to evaluate your claim and protect your interests.
CAN I RECOVER THE MONEY I LOST IN A PONZI SCHEME?
Money swindled from unlawful MLM’s, pyramid schemes, Ponzi schemes, and other fraudulent financial investments are often long gone by the time victims realize they have been taken and sufficiently organize to recoup their money. Most often, the principals and organizers of the scam no longer have enough assets to repay all the investors who lost money and others who profited from the unlawful enterprise, such as banks, pay processors, certified public accountants, lawyers, and financial investors must be held accountable.
Determining who among the many parties that serviced the fraud should be held legally responsible requires complex factual and legal analysis. Bonsignore Trial Lawyers are fully versed in what facts to look for, what legal theories work and don’t work, what experts must be retained and more. Our experienced team has successfully prosecuted businesses and individuals who assisted, but did not originate the fraudulent investment schemes.
EXEMPLAR INVESTNENT FRAUDS
Fraudulent financial investment scams are classified in many ways. Ponzi schemes are named after Charles Ponzi, who duped investors in the 1920s with a postage stamp speculation scheme. Specifically, Ponzi tricked New Englanders into investing in a stamp scheme, telling them he would buy stamps in Italy and sell them in the U.S. for a higher value.
Ponzi only purchased about $30 worth of stamps from the first $15 million victims invested. The rest of new investors' money was used to pay out early investors, purchase a mansion for himself and to fund his lavish lifestyle. Ultimately, he was and he was arrested. While Ponzi did not invent this fraudulent financial investment scam, it is named after him because his was the first well-known case in the U.S.
- Bernard Madoff Ponzi Scheme - Bernard Madoff handled approximately $17 billion and controlled 25+ funds. He ran what is likely the largest Ponzi scheme in Wall Street history.
- Tom Petters/Petters Inc. - For more than a decade Tom Petters convinced investors that his company was buying electronics and selling them to large chain stores for a profit. These transactions never took place. Petters Co. simply produced fake purchase orders and keeping new investment money for itself. Petters was eventually turned in by his Vice President of Operations.
- Nicholas Cosmo Ponzi Scheme - Nicholas Cosmo promised investors in his Agape company large returns from 48% to 80% per year. He collected $370 million from investors but invested only about $10 million. At the time of his arrest, only $764,000 of the $370 million remained in Agape accounts.
- Stanford Investment Fraud The Stanford Financial Group convinced clients to invest in a certificate of deposit program that offered extremely high returns in short periods of time. At the time, R. Allen Stanford had a net worth of $2.2 billion and was the 205th wealthiest person in the U.S.
Stanford duped affluent investors by presenting them with hypothetical investment results as historical results. It is believed Stanford has been selling "improbable, if not impossible" returns for 10+ years.
In 1995, 1996, and 2000 the Stanford Financial Group claimed their managed mutual funds program - Stanford Allocation Strategies – had positive returns of 18.04%. despite the fact it had lost 7.5%.
Stanford told clients their investments were being handled and monitored by a large team of analysts. The truth was that they were managed by Stanford himself and Stanford International Bank's chief financial officer.
- Woodbridge was a $1.2 billion dollar scheme in which thousands of people invested their retirement savings. Woodbridge employed hundreds of sales agents to advertise through television, radio, newspaper, cold calls, social media, websites, seminars, and in-person presentations, claiming investors would get paid revenue from high-interest loans to third parties. One defendant allegedly used $21 million of investors’ money for his own extravagant personal expenditures.