When ponzi schemes implode, there is usually no money left behind for the victims to recover. One silver lining for victims who lost money in ponzi schemes that actually made investments is that the fraudster typically can not accomplish the fraud alone. Collateral parties such as brokerage firms are often involved to help execute trades or be custodians of funds. Under some circumstances, those collateral parties can be held liable for their involvement in the fraud. In addition, perpetrators of ponzi schemes often utilize a sales force to help them gather assets. In exchange for new clients and funds, the ponzi scheme fraudster will pay those brokers a commission.
Those brokers often are employed by legitimate and solvent brokerage firms that are responsible to supervise the broker’s business activities. If you invested in a ponzi scheme through a broker or salesperson, it would be wise to take the following steps immediately:
- Start making a written chronology that touches on the following areas:
- How did you learn about the investment?
- Did someone recommend the investment to you? If so, who?
- Why did you decide to invest?
- What did you expect the investment to do for you?
- Did you purchase the investment to generate income? If so, how much income did it generate and how important was that income to your overall financial picture?
- How was the investment described to you? Was it described as a safe investment? Risky?
- Were any promises made to you about the performance of the investment?
- Gather all of the written marketing materials that you received in connection with the investment.
The written chronology is very important because (1) memories fail over time and (2) the document is a living document because it can evolve over time when new information is added later. For example, many times an unrelated event such as a TV commercial will trigger a memory about a statement that was made to you about the investment. If you have already created a written chronology, it is easy to add that information.