Chicago Ponzi Scheme Attorney

Cases involving Bernard Madoff, Allen Stanford and Tim Durham of Fair Finance have made Ponzi schemes front-page news in recent years and caused financial devastation for thousands of unsuspecting investors.

A Ponzi scheme is characterized as a fraudulent investment scam that pays returns to individual investors. The catch is that the returns are not coming from the profits earned by a company or organization but rather from an investor’s own money or money paid by other investors. Eventually, a Ponzi scheme is doomed to collapse, as eventually no more new investors are available or a large number of investors want to cash out altogether.

The term “Ponzi scheme” was coined by Charles Ponzi, who used the investing scam back in the 1920s. Ponzi’s scheme involved international coupons for postage stamps.

Modern-day Ponzi schemers employ a variety of techniques to trick investors and keep their investment scam going. In the case of Bernie Madoff, investors were lured by the one-time investment manager and former Nasdaq chairman with the promise of consistently positive returns regardless of market conditions.

Following his arrest in December 2008, the Securities and Exchange Commission (SEC) alleged that Madoff perpetrated his scam by keeping several sets of books along with fake documents and provided phony account statement to investors.

In the end, Madoff’s fraud totaled some $50 billion and ruined thousands of investors. As for Madoff, he is now serving a 150-year sentence in federal prison.

Ponzi schemes are growing. In 2010, the SEC filed 47 enforcement actions involving Ponzi schemes or Ponzi-like payments. One of those actions involved Medical Capital Holdings.

The SEC charged Medical Capital Holdings with fraud on July 16, 2009, in connection to sales of $77 million of private placements. Among the charges, the SEC accused Medical Capital of lying to backers as it raised and misappropriated millions of dollars of investors’ money while failing to disclose information about $1.2 billion in outstanding notes and $993 million in notes that had entered default.

Madoff’s fraud and other Ponzi schemes underscore why it is imperative for investors to do their own due diligence before entrusting their money to an investment opportunity. First, it’s always a good idea to conduct financial business with individuals and investment firms registered with the Financial Industry Regulatory Authority (FINRA). To determine if a broker or firm is registered with FINRA, go to the Broker Check web site.

Second, be suspect of anyone who “guarantees” a regular, positive or high return on an investment regardless of how the market performs. Also, be on the lookout if a broker tells you an investment has little or no risk.

Third, check your account statements. If a broker tells you there a “problem” in getting information to you about your investment and how it’s performing, you should be concerned. The same goes for accessing your money. If you are unable to cash out your investment, you likely have good reason to be suspicious. It’s your money, so make sure you thoroughly understand how that money is invested.

Contact Illinois Ponzi Scheme Investment Scam Lawyer John Barlow

Finally, let commonsense rule: If an investment pitch sounds too good to be true, it probably is. If you believe you were the victim of a Ponzi scheme, contact the law office of John C. Barlow, Esq., Attorney at Law for a free initial consultation. I have decades of experience handling investment fraud claims throughout Chicago, Illinois and nationwide. I will review the facts of your case to help you understand if you have a valid claim.

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