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‘Ponzi scheme’ and ‘pyramid scheme’ are terms that are often used interchangeably to describe investment fraud. A Ponzi scheme is a fraudulent investment scheme whereby the operator, which can be an individual or organization, pays returns to its investors from new capital paid to the operators by new investors, as opposed to profit earned legitimately. Operators of Ponzi schemes usually lure new investors by offering significantly higher returns than other investments. These are usually short-term or high-risk investments with unrealistically high levels of returns. A pyramid scheme functions by recruiting members with the promise of payments or services for enrolling others into the scheme, rather than supplying investments or sale of products or services.
Ponzi/pyramid schemes may start off as a legitimate business ventures to raise capital from investors. However, they eventually crash when it becomes difficult to recruit new investors or when a large number of investors decide to cash out. If you are accused of or investigated for operating a pyramid or Ponzi scheme, it is imperative that you contact Walk Free Law immediately. If charges have not yet been filed, it is possible that our firm can prevent them from being filed.
This is an area where our firm’s federal experience helps our clients. Ponzi or pyramid schemes are usually charged in federal court. This sometimes brings a lot of media coverage, which is bad because it taints the potential jury. Our lawyers can defend you from misleading statements and attacks in the media and protect you from making incriminating statements.
Ponzi/pyramid schemes can involve many charges, including mail or wire fraud and several securities fraud offenses. Any one of these offenses carries severe penalties such as large fines and long prison sentences.
Fortunately, there are a variety of California legal defenses to Ponzi and pyramid schemes that we, as skilled criminal defense attorneys, can present on your behalf. A common defense is to prove that you did not have fraudulent intent and that you were operating your business under honest terms. If this is successful, you will be acquitted.
We have found that investors sometimes contact law enforcement if their return on investment is lower than expected and they are disappointed. A preliminary investigation would reveal this. If this is the case, you are not culpable of these economic fraudulent offenses.
