After a string of high-profile cases, there was a lull where we didn’t hear much at all about Ponzi schemes. But, the well-known (though often-misunderstood) financial fraud scam came roaring back into the headlines last month when the Securities and Exchange Commission (SEC) unsealed a Complaint in which it alleged that three individuals had fraudulently obtained more than $345 million from hundreds of unsuspecting investors.
According to the SEC’s Press Release announcing the charges:
“An SEC complaint unsealed [on September 18] alleges that Kevin B. Merrill, Jay B. Ledford and Cameron Jezierski attracted investors to their scheme by promising significant profits from the purchase and resale of consumer debt portfolios. But in fact, the defendants were allegedly using a web of lies, fabricated documents, and forged signatures in an elaborate scheme to entice investors and perpetuate the fraud. Rather than direct investor funds . . . as promised, the defendants allegedly used the funds to make Ponzi-like payments to earlier investors.”
The Press Release goes on to allege that Merrill, Ledford and Jezierski used investors’ funds to buy, among other things, $10.2 million in luxury cars, a $330,000 diamond ring, a $168,000 diamond bracelet and several luxury homes. The Complaint also alleges that these individuals “made payments to investors of approximately $197 million, most of which consisted of money received from other investors, to deceive investors into believing that their money had been invested . . . and that they were reaping profits from those investments.
Ponzi Scheme Apparently Targeted Wealthy Investors
The SEC’s Press Release states that Merrill, Ledford and Jezierski raised more than $345 million from “over 230 investors.” This suggests that those who invested in the Ponzi scheme were not typical individual investors – as they potentially each invested more than $1 million in the scam. Along with other recent cases involving fraud schemes targeting retirement savers, this goes to show that no one is safe from falling victim to a sophisticated investment fraud scheme.
Red Flags for Ponzi Schemes (and Other Investment Fraud Scams)
That said, there are a number of red flags that tend to be indicative of fraudulent investment scams. Yet, even when some (or all) of these red flags are present, sophisticated scam artists will often still be able to convince unsuspecting investors to hand over their hard-earned funds. Some of the common hallmarks of Ponzi schemes and other investment scams include:
- Promises of guaranteed returns (and often promises of substantial guaranteed returns);
- Aggressive sales tactics and evasiveness when individuals claiming to be legitimate brokers or advisers are asked for documentation;
- Unsolicited investment inquiries from people you don’t know (although affinity fraud scams remain common as well);
- Inability to gain access to investment information or discrepancies on account statements; and,
- Overly-complicated investment opportunities, financial transactions or entity structures.
Are You Concerned About Investment Fraud?
If you are concerned that you may have invested in a Ponzi scheme or fallen victim to any other type of investment scam, we encourage you to contact us right away. Our attorneys can help you, and we can take legal action immediately if necessary. To speak with an experienced financial fraud lawyer in confidence, please call 212-742-1414 or tell us how we can help online today.