Can I Sue if I Was Caught in a Ponzi Scheme?

Ponzi schemes can be frustrating to investors who did not see them coming. When an investor chooses to put his or her money on the line, it is often in the hopes that they will make profits. However, it becomes a painful experience when they realize that it was all a fraudster’s game to extort their hard-earned money. So what does one do when they realize they have been tricked and scammed? Is suing an option they can explore? Yes it is. This article intends to address this issue in detail.

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Before hiring a Ponzi scheme lawyer, you may want to know if suing Ponzi schemers is a viable option. If so, you will also want to know how to go about it without incurring further losses or causing more damage. Being a victim of a Ponzi scheme is already stressful, and the idea of recovering your money without strain is always welcome.

What to Do When Caught in a Ponzi Scheme

Every investor looks for deals to grow their money. Sometimes, they unsuspectingly find themselves in the trap of Ponzi schemers, who seem to calculate their way into investors’ desires. More often than not, Ponzi schemes offer more than they can deliver, which is why they eventually fail. Many innocent people have been caught unaware after investing a lot of their money in what seemed to be a lucrative deal.

Defrauded investors have several options to explore. Naturally, human nature will push many of them to sue the specific schemer. Unfortunately, the most this could do is have the brains behind the scheme locked up for years, meaning that the chances of recovering their cash is minimal.

Usually, at the point where a Ponzi scheme is discovered, the defrauders have depleted all the funds and are most likely left with nothing to cover for the investors’ losses. Taking a calculated approach when suing, especially if the goal is to recover the lost funds, is advised. Bring in an expert attorney on this subject to increase your chances of winning.

Suing is a great move, as long as it is targeting the correct people. In this case, third-party players such as financial institutions and brokerage firms that worked with the Ponzi schemers should also be brought into the suit. It is the responsibility of such institutions, legally, to carry out due diligence to ensure that any business they partner with is legal and not fraudulent.

The fact that they let their client scam numerous unsuspecting investors makes them liable by law. It does not matter if they were unaware. They had the responsibility to spot the red flags and act before things got out of hand.

Any court of law will most likely rule in favor of the investor when it gets to this point. These institutions will be forced to cover the losses incurred by investors when dealing with the Ponzi scammers.

Identifying a Ponzi Scheme

You can always tell when a deal is too good to be true. For you to know if you are dealing with a Ponzi scheme, certain traits manifest:

  • Promise of high investment returns with little to no risks involved
  • Getting consistent returns even when defying market trends
  • Unregistered investments are unrecognized by the state regulator, making them illegal.
  • No information about the investment is available in writing, hence difficulties in getting any relevant paperwork to support its existence
  • Difficulties in receiving payments as time goes by, hence most of the returns are rolled over and re-invested

Usually, a Ponzi scheme starts out as very inviting and safe. Most investors will hardly suspect that something is wrong until it has fully blown and publicly exposed. However, it is never too late to report a Ponzi scheme and file a complaint. The only thing victimized investors should consider doing is taking a calculated approach, often with the help of an expert lawyer. One wrong move could jeopardize the efforts of retrieving your investment since the brokerage firm could use your own words against you. While it is an investor’s right to sue and seek justice, the secret lies in doing it right.

Interesting related article: “What is a Lawsuit?