A Ponzi scheme, named after Charles Ponzi in the 1920s, is a type of investment fraud where investors receive returns from money invested by subsequent investors and not from any actual profit earned.

In a nutshell, the Ponzi scheme attracts new investors by offering huge short-term returns. In order to ensure returns to prior investors, the scheme requires constant and increasing cash flow of money from new investors.

Ponzi schemes that operate on a small level sometimes remain unnoticed by law enforcement agencies. However, as more investors are attracted to the scheme, more new investors are required to keep the pyramid going. Eventually, the scheme will either collapse or will be interceded by the government.

Running a Ponzi scheme or a pyramid scheme is a crime. While Ponzi and pyramid schemes are sometimes investigated and prosecuted on state level, most such cases are investigated and prosecuted by the federal government.

Our New York City Ponzi scheme defense attorneys are experienced in dealing with the FTC and the SEC investigators, as well as the U.S. Department of Justice, the FBI, and the U.S. Postal Inspection Service, while defending federal “unregistered securities” cases.

Companies and individuals accused of running a Ponzi scheme are prosecuted under a variety of federal criminal statutes including mail fraud, securities fraud, tax fraud, money laundering, conspiracy, and other crimes.

Because of the highly publicized Ponzi scheme scandals of the past decade, such cases are prosecuted at the highest levels using virtually unlimited human and financial resources of the federal government.

To defend a pyramid or Ponzi scheme case often requires a team of attorneys with all the necessary experience, tenacity, and resources it takes to stand up to the government.

Because of public policies aimed against financial fraud schemes, federal prosecutors are often over-zealous in criminalizing lawful business operations.

The white collar defense lawyers of Joseph Potashnik and Associates apply aggressive defense techniques for clients accused of these types of investment fraud. We know what separates a pyramid scheme from a legitimate business model.

If you or your company is accused of running a Ponzi scheme, call our New York  Ponzi scheme defense lawyers for a confidential consultation today.