| Read Time: 4 minutes | Fraud & Misrepresentation |
how to report a ponzi scheme

Ponzi-like schemes swindle investors out of millions of dollars every year. A common form of investment fraud, a Ponzi scheme occurs when existing investors receive distributions from funds provided by new investors rather than as a result of profits.

Because Ponzi schemes can only function as long as new investors are providing funds, the schemes eventually collapse, resulting in significant losses for new and old investors.

While Ponzi schemes are illegal, they nevertheless continue to exist. In fact, some sources have noted that in 2020 Ponzi schemes hit their highest levels in a decade. 

If you are a victim of a Ponzi scheme, you may be wondering what recourse you have. Fortunately, there are actions you can take. By reporting a Ponzi scheme, you can help hold these fraudsters accountable and prevent other victims from being taken advantage of as well. 

Don’t know where to begin? Contact attorney Robert Wayne Pearce today to learn more about how to report a Ponzi scheme and see what our team can do to help. 

What Is a Ponzi Scheme?

Financial advisors recommend investment strategies to investors based on their investment profile. In many situations, investors seek investments likely to result in returns based on the profitability of the investment.

In a Ponzi scheme, investors do receive “returns.” However, these returns are not from the profits of their investment.

Rather, the operator of the Ponzi scheme will issue payments to earlier investors from the new investment funds provided by newer investors.

Inevitably, Ponzi schemes will run out of new investors who are willing to invest in the scheme. This results in the inability to issue the fraudulent returns to older investors and causes the entire scheme to crumble.

In an ideal world, these types of fraudulent schemes would not exist. Unfortunately, however, there is always some risk that you could fall victim to a Ponzi or Ponzi-like scheme. What’s important is that you know where to turn and what steps you can take moving forward. 

If you suspect you invested in a Ponzi scheme, consult with an investment lawyer who can explain the steps you should take next.

With over 40 years representing investors, attorney Robert Pearce has the knowledge and experience you need to help you fight for your rights and recovery. 

Examples of SEC Enforcement Actions Against Ponzi Schemes

In April 2021, the SEC charged Los Angeles-based actor Zachary Horwitz and his company, 1inMM Capital, LLC, in connection with a Ponzi scheme that reportedly raised over $690 million from investors. 

Horwitz and his company represented to investors that the investment funds would be used to purchase film rights and that the films would then be sold to Netflix or HBO.

Horwitz allegedly claimed to have an extensive track record of selling movie rights to Netflix and HBO, despite the fact that he never maintained a business relationship with either company. 

1inMM and Horowitz reportedly promised investors returns in excess of 35%. Instead, Horwitz paid early investors with the funds provided by new investors and misappropriated millions of dollars for himself.

In January 2020, the SEC charged California-based husband and wife Jeffrey and Paulette Carpoff with orchestrating a nearly billion-dollar Ponzi scheme involving alternative energy tax credits. 

The pair reportedly raised approximately $910 million from 17 investors between 2011 and 2018 by offering securities in the form of investment contracts through two solar generator companies, DC Solar Solutions, Inc., and DC Solar Distributions, Inc.

The SEC alleged that the couple used at least $140 million of the investors’ funds to fund their lifestyle and used the remaining funds to issue dividends to earlier investors.

If you have fallen victim to a Ponzi scheme, know that you are not alone. Reach out to our investment loss attorneys today to get started on the pathway toward recovery. 

Indicators of a Ponzi Scheme

Ponzi schemes come in many different shapes and sizes. However, there are certain common indicators of a Ponzi scheme that you should be aware of. 

Many red flags associated with Ponzi schemes present themselves prior to and during the investment process. Recognition of these characteristics before making your investment can prevent you from suffering serious losses down the road. Common indicators of a Ponzi scheme include:

  • Promises of high returns with little or no risk;
  • Returns that are overly consistent;
  • The sale of unregistered investments;
  • A lack of transparency regarding the investment strategy;
  • Errors or discrepancies on account statements; and
  • Difficulty receiving or cashing out your payments.

The presence of red flags such as these may signal the existence of illegal activity. If you experience any of these issues with your investments, a securities lawyer can help you determine if you invested in a Ponzi scheme. 

Reporting a Ponzi Scheme

Ponzi schemes can cost investors millions of dollars in losses. In an attempt to curb the operation of the fraudulent schemes, the SEC and FBI provide resources for individuals who suspect Ponzi schemes to report the misconduct.

Federal Bureau of Investigation (FBI)

The FBI provides an electronic tip form to individuals wishing to report federal law violations. Additionally, for internet-based crimes, the FBI offers another way to submit a tip. Because many Ponzi schemes begin and operate online, this might be the best place to report a Ponzi scheme.

Securities and Exchange Commission (SEC)

The SEC also provides defrauded investors an avenue to report suspected Ponzi schemes and other fraudulent activities. SEC Ponzi scheme tips can be submitted online directly through the SEC website. 

Contact an Investment Loss Attorney Today

Losing your valuable and hard-earned money in a fraudulent Ponzi scheme is never easy. If this has happened to you, we want to help.

At the Law Offices of Robert Wayne Pearce, P.A., we have decades of experience helping investment loss victims in need.

Firm founder and lead attorney Robert Pearce has recovered funds for over 99% of his investor clients and recovered over $100 million in the last 20 years alone through court litigation, arbitration, and settlements. 

Want to know more about how to report a Ponzi scheme? Give our team a call today to discuss your case and see what we can do for you. 

Author Photo

Robert Wayne Pearce

Robert Wayne Pearce of The Law Offices of Robert Wayne Pearce, P.A. has been a trial attorney for more than 40 years and has helped recover over $140 million dollars for his clients. During that time, he developed a well-respected and highly accomplished legal career representing investors and brokers in disputes with one another and the government and industry regulators. To speak with Attorney Pearce, call (800) 732-2889 or Contact Us online for a FREE INITIAL CONSULTATION with Attorney Pearce about your case.

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