Recession Has Ponzi Schemes Crawling out of Wood work
From Colorado, where Shawn Merriman defrauded investors of $20 million and channeled the money into a collection of hundreds of art masterpieces, to Hawaii, where a promoter siphoned funds solicited from the Deaf at community centers, to the big daddy of them all, Bernard Madoff; Ponzi schemes are rearing their ugly heads left and right.
We have the recession to thank for the manner in which the words "Ponzi scheme" have become a part of main stream American culture in recent months. In December of 2009, the U.S. Securities and Exchange Commission (SEC) was bringing in an average of three Ponzi schemes a month. We are just four months into 2009 and that figure has leaped to more than 24. With each new Ponzi scheme that comes to light, it becomes more clear that we have yet to see the end of the fraudulent schemes.
In most cases, Ponzi fraudsters use investor money partly to fund their lavish lifestyles, while the rest is used to pay off early investors and keep the scheme afloat. The recklessness with which fraudsters squander investor money is a common feature of many of the Ponzi schemes that have been exposed.
Texas financial promoter Ray White has been accused of running a Ponzi scheme worth $10.9 million, some of which was diverted into boosting the auto racing career of his son. Shawn Merriman seems to have used his investment funds to undertake hunting safaris in Africa, filling his home with stuffed animal heads. Everything seemed to have been going well for many of these people until the credit crunch came about and funds stopped flowing in as freely as before. Anxious investors began to worry about the high returns they had been promised, which typically lead to the scheme's reveal.
Since January 1st, the SEC has filed more than two dozen emergency enforcement actions in order to stop Ponzi scams. Securities attorneys have been flooded with calls from worried investors. Last week alone, new action was taken against alleged frauds in Hawaii, California, and Montana.
Avoid Ponzi Schemes
Ponzi schemes tend to work perfectly until funds begin to dry up, which is why the worst recession in decades has led to the discovery of so many of these cases. The internet seems to have provided a good home for these fraudsters. Last week, the Council of Better Business Bureaus warned that several scams are beginning to move online and are targeting people with financial woes.
If you or a loved one has lost funds due to a Ponzi scheme or other fraudulent act a securities attorney can help you recover lost investments. For a free evaluation of your case and to find answers to your questions, contact a securities attorney at Arnold & Itkin LLP.
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Prosecutors also plan to seize assets in Ruth Madoff's name including: $17 million cash and $45 million in bonds. The Madoffs' lawyers insist Ruth is the sole owner of the cash, bonds and Manhattan apartment and that they are not related to her husbands $65 billion Ponzi scheme. In addition, loans given to the Madoffs' sons, Mark and Andrew, adding up to nearly $32 million are on the list of assets to be seized.
Earlier in the week Madoff refused to agree to a plea deal with prosecutors and admit to conspiracy, implicating others. Because of his refusal investigators will have no help in identifying others involved in the scheme. According to .jpg)
The next day, authorities found Nadel's vehicle in a local airport parking lot. He also left his wife a handwritten note explaining he left documentation enough for her to take over what is left, "even documentation for divorce" and felt "extreme guilt." He also advised her to withdraw money as soon as possible, knowing the assets would be frozen shortly.
At least 300 investors with their 
Florida has been hit particularly hard in the recent series of investment fraud scandals that have come to light. The victims of 
According to insiders, nearly half of all 
scandal was a flash in the pan and that few other Ponzi schemes and 