Eileen Epstein Carney
Eileen works closely with investors in securities cases and has over a decade of experience in the legal world. She received her law degree from American University in 2005.
A Ponzi scheme is a type of investment scam that uses money from new investors to pay off earlier investors, while promising high rates of return. Ponzi schemes rely on a constant stream of new investors to maintain returns, and tend to collapse when new investors are not available, or when existing investors ask to cash out. One of the most famous Ponzi schemes, ran by Bernie Madoff, operated for over 30 years and cost investors over $30 billion when it collapsed in 2008.
Identifying a Ponzi scheme can be extremely difficult. Worse, once identified, it may be too late for investors to get their money out. Our securities lawyers may be able to recover your losses. Contact us today to learn more.
Victim of a Ponzi Scheme? Speak With a Lawyer
You may be eligible for monetary recovery. Contact us for a free and confidential consultation.
Ponzi schemes are generally operated by a central person who uses the investments from new investors to pay off the returns for the older ones. Since many of the older investors often do receive high returns, the operation seems profitable and, therefore, legitimate. However, there is typically no actual profit being made in these schemes. The person behind the scheme is usually pocketing the extra money and continually expanding the operation.
For this reason, Ponzi schemes are extremely risky and unsustainable. When Ponzi schemes inevitably collapse, investors often lose large amounts of money. If you believe you are a victim of a Ponzi scheme, and have lost part or all of your investment as a result, we encourage you to speak with an experienced securities attorney immediately. You may be able to recover your losses.
Ponzi schemes typically follow a simple pattern that can be surprisingly effective. Many Ponzi schemes are able to progress from a few initial investors to hundreds or thousands of investors contributing millions of dollars in a relatively short time frame. Typical elements of a Ponzi scheme include:
If you made an investment with any of these characteristics, you may be the victim of a Ponzi scheme. Speak with an attorney immediately to avoid losing your investment.
While similar, Ponzi schemes are actually different from Pyramid schemes. Visit our Ponzi Scheme vs. Pyramid Scheme page to learn more.
While Ponzi schemes are often hard to identity, there are a few warning signs that investors can look for when considering a new investment. According to Investor.gov, these red flags include:
We encourage you to contact our firm immediately if you experience any of these red flags. All our consultations are free and confidential.
The Securities and Exchange Commission (SEC) has issued an alert for investors to be aware of any scams involving virtual currency. According to the SEC’s Investor Alert:
We are concerned that the rising use of virtual currencies in the global marketplace may entice fraudsters to lure investors into Ponzi and other schemes in which these currencies are used to facilitate fraudulent, or simply fabricated, investments or transactions. The fraud may also involve an unregistered offering or trading platform. These schemes often promise high returns for getting in on the ground floor of a growing Internet phenomenon.
The SEC has recently been involved in a case regarding a Ponzi scheme advertising a Bitcoin investment in an online Bitcoin forum. The operator of this scheme allegedly promised investors up to 7% interest per week, generated from Bitcoin arbitrage activities. The case, SEC v. Shavers, entered into final judgement in 2014, and the operator of the scheme was ordered to pay over $40 million in discouragement and penalties.
Our securities fraud lawyers have successfully represented consumers from all across the country who had fallen victim to a Ponzi scheme or other securities fraud. Two of our most prominent cases include:
Medical Capital Litigation
Gibbs Law Group litigated a Ponzi scheme class action lawsuits on behalf of investors who suffered an investment scam by four different entities. The lawsuit alleged that Securities America and Ameriprise Financial misleadingly marketed Medical Capital Notes to their clients as reliable investments. In reality, however, these investments were part of a Ponzi scheme. Our investment scam team served as Co-lead Council on this case and secured a settlement of $80 million on behalf of investors.
Towers Financial Corporation Noteholders Litigation
Our firm served as liaison counsel in this class action brought against promoters and professionals who falsely marketed Towers Financial Corporation’s promissory notes. The Securities and Exchange Commission described this failed investment scam as the “largest Ponzi scheme in U.S. history.”
Our securities lawyers have also filed a class action lawsuit against GPB Capital, which was accused by a former business partner of being a Ponzi scheme.
Eileen works closely with investors in securities cases and has over a decade of experience in the legal world. She received her law degree from American University in 2005.
David’s advocacy has generated major recoveries for consumers impacted by financial fraud. He was named to the Top 40 Under 40 by Daily Journal and a “Rising Star in Class Actions” by Law360.
Amanda is spearheading a securities lawsuit against NantHealth concerning fraudulent statements to investors about the success of its key product.