Proving Ponzi scheme allegations

On Behalf of | Sep 16, 2021 | White Collar Crimes

A conviction related to a Ponzi scheme investment fraud generally involves proof that a defendant did not invest the funds received. As explained by Investor.gov, a Ponzi scheme requires evidence that a fund promised investors a high return without an intent to generate income from business activities.

Instead of using investors’ money to invest in a business venture, a Ponzi scheme directs funds toward personal expenses unrelated to genuine investments. Investors may receive account statements claiming their investments increased in value, but a prosecutor may prove profitable activities never took place.

Prosecutors may need to prove new investors paid existing investors

When investors believe the fund’s value has grown, they may invest further. They may also tell others about the fund, and those individuals may also invest in hopes of receiving a high return.

When statements show their original investments increased in value, existing investors may request cash payouts. To convict on a Ponzi scheme fraud, a prosecutor may need to prove the fund’s manager sent payouts with money received from new investors.

Ponzi scheme allegations lead to a Texas resident’s plea deal

As reported by CBSDFW.com, a Dallas resident alleged to have operated a Ponzi scheme pleaded guilty to mail fraud. Reportedly, he used U.S. mail to send new investors letters thanking them for joining the investment family.

Prosecutors originally charged the individual with two counts of fraud and one count of mail fraud. In exchange for admitting to a Ponzi scheme, prosecutors dropped the two fraud charges; the defendant only received sentencing for the mail fraud charge.

To convict on charges related to a Ponzi scheme, prosecutors generally show existing investors received money from a fund’s new investors. A charged individual, however, may have an option to request a plea deal and avoid trial.

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