Ponzi scheme: Texas men targeted in both criminal, civil cases

Federal and state agencies prominently elevated financial crimes to a top-tier investigatory category several year ago, during the so-called Great Recession that spawned a major economic crisis.

We note on a Hilder & Associates website page focused upon Ponzi scheme investigations and defense that potent task forces from both the criminal and civil realms conduct aggressive probes against alleged wrongdoers.

The U.S. Securities and Exchange Commission often extracts heavy fines and additional penalties against targeted individuals. And the U.S. Department of Justice has “a special financial crimes task force to investigate and prosecute Ponzi scheme perpetrators.” A DOJ-driven probe can result in a host of material exactions, including lengthy prison terms for convicted parties.

Several individuals, including two Texas residents, felt the two-pronged sting of DOJ and SEC fraud investigations in a recently concluded Ponzi scheme case. Although final details concerning civil and criminal penalties are still pending, proceedings in both realms point to an expected harsh outcome.

The scheme involved consumer debt portfolios. Creditors sometimes opt to sell long-term uncollected debtor obligations to third parties at a deep discount. The buyers then aggressively pursue debtors for whatever payment they can extract, hoping to make a profit. Sometimes, too, they invite investors to partake in debt acquisition and servicing.

That invitation is what centrally marked the alleged fraud committed by the above-cited individuals. Authorities say that, while they raised more than $345 million from hundreds of investors, that money did not go toward debt portfolio acquisition. Rather, as noted in a Financial Advisor article on the scheme, the defendants “used the funds to make Ponzi-like payments to earlier investors and fund luxury purchases.”

The fraudulent venture reportedly occurred over a number of years, until it eventually collapsed in 2018.