What is a Ponzi Scheme

A Ponzi scheme is a fraudulent investment operation where the operator, an individual or organization, pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned by the operator. Operators of Ponzi schemes usually entice new investors by offering higher returns than other investments, in the form of short-term returns that are either abnormally high or unusually consistent.

The attorneys at Sallah Astarita & Cox, LLC have represented investors in numerous Ponzi Schemes, including the Madoff Ponzi Scheme and Agape World, Inc. They have also represented court-appointed receivers charged with recovering investments, including the $70 million JCS Enterprises scheme, and have been appointed as receivers and corporate monitors. Call 212-509-6544 if you believe you have been a victim of a Ponzi Scheme.

Ponzi schemes occasionally begin as legitimate businesses, until the business fails to achieve the returns expected. The business becomes a Ponzi scheme if it then continues under fraudulent terms. Whatever the initial situation, the perpetuation of the high returns requires an ever-increasing flow of money from new investors to sustain the scheme.

The scheme is named after Charles Ponzi, who became notorious for using the technique in 1920. Ponzi’s original scheme was based on the arbitrage of international reply coupons for postage stamps; however, he soon diverted investors’ money to make payments to earlier investors and himself.

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Call 212-509-6544 if you believe you have been a victim of a Ponzi Scheme.

The attorneys at Sallah Astarita & Cox, LLC are former SEC Staff Attorneys and brokerage firm counsel, with over 100 years of collective experience. If you have received a subpoena from the SEC, a document request from FINRA, or have a dispute with a brokerage firm, call 212-509-6544 for a free consultation. The firm represents investors and financial professionals nationwide.