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.