Ponzi schemes are probably the most famous type of white-collar crime. However, understanding the meaning and consequences of a Ponzi scheme is another matter.
Investor.gov defines a Ponzi scheme as a type of investment fraud that pays investors with the fees collected from new investors. Problems arise when new investors dry out or old investors demand all their money.
Anticipate a swift and public charge
Not every investment that loses money or seems complicated is a Ponzi scheme. The U.S. Securities and Exchange Commission currently takes accusations of fraud very seriously. If anyone accuses you, the federal government will act fast to make a public example of your alleged wrongdoing. The recent concern with cryptocurrency makes any allegation against you incredibly enticing to prosecutors.
Expect these accusations
If you face charges for committing investment fraud, expect to encounter some or all these charges. The prosecutor would accuse you of mail fraud if you received payments through the mail. Any electronic communication makes you susceptible to accusations of wire fraud, even if you do not receive any payments electronically. Merely reaching out to a customer gives a prosecutor reason to charge you with wire fraud. Wire fraud punishment increases if you communicate across state or national lines. Finally, bank fraud is a likely charge as most Ponzi schemes almost always use some accounting manipulation.
An investment fraud charge can potentially ruin your professional and private reputation. Even if the charge is fraudulent, it is difficult to move on after such a serious accusation. Your best option is to start thinking of defense strategies immediately.
