Strategic Federal And State Criminal Defense

California man arrested for $50 million Ponzi scheme

On Behalf of | Nov 13, 2012 | White Collar Crimes |

A Ponzi scheme is a form of white-collar crime that involves investment fraud. In recent years, Ponzi schemes and other white-collar crimes have received considerable attention, as many large schemes have become public. In particular, Ponzi schemes became well known following the very public trials of businessman Tom Petters and financier Bernard Madoff.

According to the Securities and Exchange Commission, a Ponzi scheme involves paying older investors funds contributed by newer investors. Ponzi schemes are sustainable only so long as the scheme can bring in new investors. Since a Ponzi scheme has no real earnings, when investors stop contributing, or when large numbers ask to cash out, the pyramid collapses.

In a recent case, a California man was arrested for running a Ponzi scheme. Agents arrested the man on wire fraud charges for running a fraudulent investment scheme. According to agents, the scheme raised nearly $50 million from investors who lost $32 million. Much of the money was allegedly lost due to bad trades, Ponzi payments and personal expenses.

The man is expected to face a 16-count indictment in the United States District Court in Los Angeles. The indictment includes 12-counts of wire fraud, three counts of signing false tax return statements and one count of making false statements to a federal agency. According to prosecutors, if he is found guilty on all counts he could face 260 years in federal prison.

With such serious potential consequences it is important to wage an aggressive defense from the very beginning. In addition to addressing the evidence, a good defense attorney will also seek to protect their client from prejudice. With so much press, and a few recent high profile cases, guaranteeing a fair and unbiased trial is paramount to a good defense.

Source: Imperial Valley News, “Diamond Bar Man Arrested on Federal Charges of Running Ponzi Scheme,” October 31, 2012