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Texas Ponzi Scheme Attorney

A Ponzi scheme is an illegal investment campaign in which fraudsters recruit naive investors under the premise that they will receive massive returns quickly. The schemers fabricate marketing plans, generally with technical jargon unfamiliar to potential investors and, as more investors participate in the seemingly legitimate plan, their money goes to pay early investors rather than being invested. In a Ponzi scheme, the fraudster interacts with all participants and uses one participant's investment to pay returns to others.

Ponzi schemes are named after Charles Ponzi, a 1920s fraudster.

The Italian moved to the U.S. and 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. After about $15 million was invested, Ponzi had only purchased about $30 worth of stamps. He merely used new investors' money to pay out early investors. He had a mansion and lived luxuriously, drawing attention to himself, which resulted in the public's interest. Ultimately, he was investigated, his public relations agent denounced him in The Post, and he was arrested. Ponzi, however, did not invent the scheme; it is named after him because his case was the first well-known case in the U.S.

Modern Day Ponzi Schemes

  • Bernard Madoff Ponzi Scheme - Bernard Madoff controlled 25+ funds and handled approximately $17 billion. It was reported that his losses were estimated at $50 billion. He faces 20 years in prison and a $5 million fine for what is likely the largest Ponzi scheme in Wall Street history.
  • Tom Petters Ponzi Scheme - Tom Petters faced 20 counts of mail and wire fraud, money laundering, and conspiracy for a Ponzi scheme he allegedly ran for more than a decade. The businessman convinced naive investors that his company was buying electronics and selling them to large chain stores for a profit. However, these transactions were not taking place. Instead, Petters Co. was producing fake purchase orders and keeping the investment money for itself. Petters was not caught by investors requesting returns but was turned in by his VP of Operations. She went to the authorities, agreed to help with the investigation and was, subsequently, offered a plea bargain.
  • Nicholas Cosmo Ponzi Scheme - Nicholas Cosmo, a former stockbroker and felon, served 21 months in prison for misappropriation of funds from 1998-2000. His website, however, claims his company Agape World Inc. has been a "private bridge lender" since 1999, months before he was released from prison. This "typo" and his January 26th arrest for $370 million worth of mail fraud add up to no good. Cosmo promised investors large returns from 48% to 80% per year but invested only about $10 million of investors' money. Investigators' reports show that only $764,000 of the $370 million remains in Agape accounts and explains most of it was used to pay early investors. Although reports do not officially name Cosmo as a Ponzi schemer, he looks like one.

Contact a Houston Investment Fraud Attorney: (888) 493-1629

If you have incurred a serious financial loss as a result of investing in a Ponzi scheme or other fraudulent investment, you have rights. You may be entitled to recover losses from those responsible. The team at Arnold & Itkin LLP aggressively represents clients and can help you in litigation or arbitration of investment fraud claims. To schedule a free and confidential consultation, contact a Houston investment fraud lawyer today.

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