Ponzi Scheme Florida: How to Detect It and Protect Your Assets

Have you been impacted by a Ponzi scheme in Florida? This comprehensive guide to Florida Ponzi schemes covers everything you need to know.

The Basics of a Ponzi Scheme in Florida

Ponzi schemes take their names from Charles Ponzi, who cheated investors in the 1920s with a postage stamp speculation scheme. He guaranteed investors a 50 percent return on their investment in postal coupons. Although at the beginning he was able to pay his initial investors, later on, the scheme dissolved as he ran out of money and postal coupons. 

A Ponzi scheme, or also the so-called ‘pyramid scheme,’ is an investment fraud that pays investors from funds gathered from other investors. The new investors are attracted and indoctrinated with fast money in large amounts. The investors are also promised high returns with apparently no risks. 

Although the whole deal might allure you, it is essential to know that fraudsters do not invest the money but instead use the investor money to pay other earlier investors or keep the money for themselves.

With no legitimate outcomes and earnings, these Ponzi schemes constantly require new recruiters and investors; otherwise, they will collapse, having no real income.

Largest Ponzi Scheme in Florida

Scott Rothstein is known as the coordinator of the largest Ponzi scheme in South Florida. The former lawyer was convicted to 50 years in federal prison for using his law firm to run a $1.2 billion Ponzi scheme. He used the money to buy yachts, sports cars or contribute to the Florida political scene. 

What Are Ponzi Schemes?

As mentioned above, Ponzi schemes are fraud schemes that shape diagrams of how investors get paid. It is only a matter of time until a Ponzi scheme gets unraveled due to the lack of new investors and money running out. 

You should stay away from a Ponzi scheme since there is no guarantee that you will win anything. If a deal sounds too good to be true, it’s probably a fraud. 

As seen recently in a U.S. Securities and Exchange Commission (SEC) lawsuit, two men were accused of raising over 190 million dollars for a Ponzi scheme from 173 investors. Ponzi schemes are an old way of making quick cash grabs, and unfortunately, they are quite common even in our day and age.


How Are Ponzi Schemes Created?

Before learning how Ponzi schemes are created, you must know what to look for if you suspect a Ponzi scheme. Here are some red flags to look out for:

  • You will be guaranteed large amounts of money;
  • Your investments are not recorded to the SEC;
  • There is no paperwork included;
  • The investments are complex and secret;
  • You will face difficulties withdrawing your money;
  • The sellers are unlicensed.

Both federal and state laws require investment firms or professionals to be registered or licensed. If you don’t find or get enough information about an investment firm, avoid working with it. 

A Ponzi scheme will eventually collapse, as it can not recruit new members and new investors forever. No matter the size of Ponzi schemes, they inevitably must fall apart since they cannot expand beyond the earth’s population. No matter how good the deal may sound, you should avoid it right away.

What to Do if You’ve Been Impacted by a Ponzi Scheme in Florida

In some cases, a Ponzi scheme can last for years, survive for decades, or collapse within a few months. If you have been the victim of a Ponzi scheme in Florida or elsewhere, make sure to contact our law firm. An investment fraud attorney is ready to take action to protect your rights. Our office is located in South Florida, but we serve clients throughout the United States, so you can get the trusted help you need whether you are located in Miami, Los Angeles, or New York.

Our investment fraud attorney will review your claim, explain what options you have, and help you get the compensation you deserve. Contact us at 954-790-5181 right away, and receive a free consultation to establish how dire your situation might be and how it can be resolved without further damages.

Florida Ponzi Scheme Tactics

Due to their nature, Ponzi schemes can be applied in all sorts of businesses, including real estate. According to the Securities and Exchange Commission, Ponzi schemes are already developed within modern technology.

In a recent case, SEC vs Shaver’s, the Ponzi scheme organizer has advertised a Bitcoin investment opportunity. The investors were promised a 7% interest per week and that their initial investment will be returned. Instead, those who decided to invest Bitcoins only paid the existing investor for the organizer’s personal expenses.

Virtual currencies, such as Bitcoin, have become popular among online users and are intended to serve as money. They can be used for online shopping, which can attract fraudsters to use these virtual currencies.

According to a FINRA funded study, there are five main psychological tactics used in Ponzi schemes that most people fall victim to, including:

  1. The ‘Phantom Riches’ Tactics, or alluring the wealthy and luxurious owners;
  2. The ‘Source Credibility’ Tactics, establishing credibility among associations and reputable entities;
  3. The ‘Social Consensus’ Tactic, or stating that others have invested too;
  4. The ‘Reciprocity’ Tactic, or offering to do a small favor in return of a big favor;
  5. The ‘Scarcity’ Tactic, or creating a false sense of urgency.

People can fall victim to Ponzi schemes quite easily; however, the most important part is not being ashamed that you were tricked and proceeding with legal actions against these trust abusers.

At Clark Law Group, P.A., we work closely with our clients to help recover their losses. If you have been the victim of a Ponzi scheme, you need to seek a trusted business lawyer. Besides the claim against the Ponzi scheme organizer, you might claim against a third person who recommended the investment.


Ponzi Scheme Complaint Florida

As recommended by the FBI, FINRA, and SEC, or Florida Securities Division, you need to understand what you invest in before investing. Make sure always to verify the investment details and the promoter’s claims. Find out if the promoter is appropriately licensed, or if they are exempt from licensing, try to see why that is the case.

The U.S. Securities and Exchange Commission allows individuals to file a securities fraud complaint here. Despite this option, it’s still a good idea to work with a lawyer to file a private claim to ensure that you know your rights and that you can quickly recover your losses. Our strategic and trustworthy investment lawyers will ensure that your money lies in good hands and will work strategically to recover the losses suffered in a Ponzi scheme.

What Is the Difference Between a Ponzi and Pyramid Scheme?

The difference between a Ponzi and a pyramid scheme is that a Ponzi scheme only requires investments from the victims. In contrast, pyramid schemes offer the victims the chance to make money by recruiting new people. 

They both involve unscrupulous investors that take advantage of individuals by promising them high returns. The Pyramid Scheme is even more damning. There is nothing wrong with wanting to invest in something and increase your finances; however, when you are pushed to use others, it will also affect your moral character.

At the Clark Law Group, P.A., we know how to deal with and hold the perpetrators and facilitators of Ponzi schemes accountable for their actions and manipulations. If you or someone you know has been drawn into a fraud scheme, make sure to ask for a free consultation at 954-790-5181, so we can begin looking into the details of your case. 

Don’t let shame or fear prevent you from taking legal action. We are here for you and will fight for your rights until the end!