Ponzi and pyramid schemes are investment fraud crimes that fall under the jurisdiction of the U.S. Securities and Exchange Commission (SEC). As such, they are often federal crimes and entail harsh penalties. If you are under investigation or are already facing charges, speak to a defense lawyer straightaway. For immediate assistance from a Ponzi/pyramid scheme criminal defense attorney in St. Petersburg, call Goldman Wetzel at 727-828-3900.
What do Ponzi and pyramid schemes entail?
Ponzi schemes are a specific type of investment fraud in which the main schemer (individual or company) entices new investors with high returns, and then uses new investors’ money to pay returns to prior investors, rather than paying them from profits.
Ponzi schemes get their name from Boston businessman Charles Ponzi, who, in the 1920s, devised a scheme involving postage stamps that spread throughout the country. A Ponzi scheme can involve various types of levels of fraud, such as making false promises (high returns, no risk) and falsifying documents. The schemer generally pockets much of the new funds that come in, until the scheme collapses.
Other pyramid schemes involve classic pyramid sales models, in which a recruiter entices people to join, start their own franchise, and then recruit others to do to the same. While some pyramid schemes are legitimate, others promise extraordinary (and fabricated) returns on investment, constituting fraud.
What penalties might I face for Ponzi scheme charges?
Because there is no federal statute for Ponzi or pyramid schemes, penalties differ. Upon conviction, defendants may face various types of charges depending on the circumstances. The courts may order prison time, fines, and restitution.
However, under Florida Statutes § 849.091 makes it a misdemeanor of the first degree to participate in a pyramid scheme. Penalties may include a fine up to $1,000 and up to a year in jail.
Defendants may face charges under Florida’s Deceptive and Unfair Trade Practices Act [Florida Statute § 501.201 – 501.213] as well. Charges may range from misdemeanor to felony. Depending on the charges, penalties might include:
- Prison/jail time
- Fines and restitution
- Community service
- Loss of business license
Many people charged with Ponzi scheme crimes also face other similar charges such as bank fraud and wire fraud. Talk to your lawyer at Goldman Wetzel about the exact nature of your charges and what you are up against.
How can I defend against Ponzi/pyramid scheme charges?
There are viable defenses that defendants may use to fight Ponzi scheme charges, but gathering supportive evidence and crafting a strong case takes a good bit of time and effort.
Many Ponzi schemes start out as legitimate businesses. It is not until the business starts to falter that the accused starts scrambling to find ways to make good on payments to investors. Some people caught in the midst of a Ponzi or pyramid scheme have no idea the operations are shoddy; they simply believe they have found good fortune and made smart choices in their investments.
In order for the government to prove you are guilty of fraud, the prosecutor has to be able to show that you had intent to defraud. So, most defenses in these cases revolve around proving lack of intent.
The facts, evidence, and circumstances for each case differ. You will want to speak to a fraud/theft lawyer at our firm about the best way to defend against Ponzi or pyramid scheme charges for your particular case. For a Ponzi/pyramid scheme defense attorney in St. Petersburg who handles federal investment fraud charges, contact Goldman Wetzel at 727-828-3900 today and let us get to work on your defense.