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What Types of Charges Occur in Ponzi Schemes?

Ponzi Scheme charge

The term Ponzi scheme has become relatively well-known as a result of prominent white collar fraud cases that have made national news in recent years and decades. Yet it can be difficult to understand exactly what is involved in a Ponzi scheme, and what kinds of charges you can face if you are accused of orchestrating a Ponzi scheme. Our experienced federal fraud defense attorneys in Dallas can speak with you today about your circumstances and can help you to determine the best course of action if you are being investigated for your involvement in a Ponzi scheme or if you are facing charges related to a Ponzi scheme.


What is a Ponzi Scheme?

In order to understand what types of criminal charges are typically brought when someone is accused of involvement in a Ponzi scheme, it is essential to understand what a Ponzi scheme involves. According to the Federal Bureau of Investigation (FBI), a Ponzi scheme is a type of fraudulent scheme that “promise[s] high financial returns or dividends not available through traditional investments.” Yet the funds are never actually invested, and the investors can lose significant amounts of money.

Indeed, as the FBI clarifies, “instead of investing the funds of victims . . . the con artist pays ‘dividends’ to initial investors using the funds of subsequent investors.” Ponzi schemes are named after Charles Ponzi, a person who defrauded investors after the turn of the twentieth century by promising a “50 percent return on their investment in postal coupons,” according to the FBI.

Sometimes the terms Ponzi scheme and pyramid scheme are used together or interchangeably, but these are actually two different types of fraudulent schemes. Unlike a Ponzi scheme, a pyramid scheme requires investors to recruit other investors, thereby creating a hierarchy of investors. The types of schemes are similar in that the investments from the new investors are used to pay “dividends” to existing investors.


What Kinds of Charges Are Brought in Ponzi Scheme Cases?

Given that Ponzi schemes involve fraud, there are many different types of federal fraud charges that you can face for alleged involvement in a Ponzi scheme. You could face the following charges, for example:

  • Wire fraud if you are alleged to have furthered the Ponzi scheme through any kind of electronic communication, including through e-mail or texting;

  • Mail fraud if you are alleged to have furthered the Ponzi scheme through any kind of hard copy mail communication;

  • Securities fraud, which may include violations of the Securities Exchange Act of 1934 or the Investment Company Act of 1940; and

  • Bank fraud if you are alleged to have furthered the Ponzi scheme through use of banks.

Seek Advice from a Federal Fraud Defense Attorney in Dallas Today

If you are under investigation for alleged involvement in a Ponzi scheme, or if you are facing federal fraud charges related to Ponzi scheme involvement, it is critical to begin working with an experienced Dallas federal fraud defense lawyer as soon as possible. An advocate at our firm can speak with you today about potential defense strategies. Contact the Law Office of Patrick J. McLain, PLLC to learn more about how we can assist you.