Are You Being Targeted by a Ponzi Schemer?

by Ben Widlanski | May 2019

“An ounce of prevention is worth a pound of cure” is never truer than in the context of a Ponzi scheme. No matter how successful law enforcement and private attorneys might be at recovering stolen money, no victim in their right mind would willingly go through the pain, heartache, and stress of being a fraud victim. Unfortunately, the people who operate Ponzi schemes, like all fraudsters, have learned many tricks designed to convince unwitting victims to hand over their life savings. Learning to spot the fraudster cloaked in sheep’s clothing is not easy, and crooks are developing new methods every day, but there are a few tactics that occur over and over in large Ponzi schemes.

Is it too good to be true? If a financial analyst offers you a deal with “guaranteed” high-rate returns on investment, be very skeptical. All reputable brokers or investment advisors will tell you that there is nothing guaranteed about investing – anyone who says differently may be not telling you the whole truth.

Is the opportunity “now or never”? The vast majority of legitimate investment opportunities will not, like Cinderella’s coach, turn into pumpkins at midnight. If an advisor tries to push you into investing immediately, claiming that the opportunity is only available for a limited time, you should be very careful.

Is it a “secret” opportunity? While there are some investment opportunities that are held aside for a select few (for instance, initial public offerings of high-value companies, sold through investment banks like Goldman Sachs or Morgan Stanley), if someone tries to tell you that they have an opportunity that is unique or special, and they aren’t offering it to anyone else, it’s almost certainly not true. Investment opportunities, most of the time, don’t care where the money comes from – your money is just as good as someone else’s; exclusivity sometimes makes people want to jump in with both feet.

Is the investment so good the advisor or his family has money there? Fraudsters will often tell you that they’ve placed their mother or sister with an opportunity. That may convince you that it’s safe and secure, when in reality it’s anything but. Don’t ever be persuaded to invest because someone else has done so – evaluate each opportunity on its own merits.

Is the advisor “making an exception” for your investment? If an advisor tells you that he’s bending rules, or doing something he shouldn’t be doing, it’s likely that he is – but not the rules he’s citing. Suggesting that an investment isn’t appropriate for an investor is an age-old tactic, as the forbidden fruit often tastes sweeter.

These are just some of the many techniques fraudsters may use to trick you into investing with them. There are, unfortunately, many others. The bottom line is: don’t ever invest money until you double or triple check the investment opportunity and the advisor. Don’t be fooled by fancy titles, flashy offices, flattery, or promises of immediate or guaranteed success – there’s no quick path to wealth, and make sure that you do your own homework to ensure that you aren’t being swindled.

Kozyak Tropin & Throckmorton

Ben Widlanski
Ben Widlanski is a partner at KTT who focuses on high-stakes commercial litigation, class actions, and Ponzi scheme and financial fraud recoveries. Prior to his time at KTT, Ben was an assistant United States Attorney in the Southern District of Florida, where he litigated, prosecuted, and investigated hundreds of federal criminal actions. Ben is also a former United States Army officer, and a graduate of Columbia University and Columbia Law School.​

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