What Is a Ponzi Scheme?

Under Pennsylvania law, Ponzi schemes are a type of investment fraud. In a pyramid scheme, a promoter collects money from a certain number of people, who in turn knowingly collect more money by recruiting others. In contrast, a Ponzi scheme refers to a fraudulent scam that promises high rates of return on an investment, when in fact any money received is actually coming from “investors” who enter the scheme later. The scheme generates returns for older investors by acquiring new investors. Under both pyramid and Ponzi schemes, eventually, there is not enough money to go around, and the schemes quickly unravel.

If you have been charged with a white collar crime, such as investment fraud, in Pennsylvania, you need knowledgeable and experienced legal representation on your side throughout your entire case.

Attorney Brian J. Zeiger can help safeguard all of your legal rights while your criminal case is pending, and can help formulate potential legal defenses to your criminal fraud charge.

Historical Background

Ponzi schemes were named after Charles Ponzi (1882-1949), who implemented a scheme that paid early investors with money gained from later investors. Today, Ponzi schemes are criminalized under Pennsylvania’s fraud and white collar crime laws.

Prosecuting Ponzi Schemes

In its most basic sense, a Ponzi scheme involves a swindle in which the promise of a quick return lures the crime victims into taking bigger risks. Since they involve fraud, Ponzi schemes are normally prosecuted as federal crimes, but they may also be prosecuted under Pennsylvania state laws. They may also be charged as either felonies or as misdemeanors, depending on the nature of the crimes. Felonies are normally punishable by more than one year of incarceration. Misdemeanors are punishable by up to one year of incarceration, or by fines or other less-serious penalties.

Possible Penalties upon Conviction

Ponzi schemes are serious crimes and, depending upon the facts and circumstances of the case, can result in severe criminal penalties upon conviction, including jail time. Common penalties upon conviction include:

  • Probation
  • Fines
  • Restitution to the alleged victims
  • Community service
  • Injunctions
  • Restraining orders
  • Revocation of business licenses
  • Freezing business assets
  • Jail time

Contact a Philadelphia, Pennsylvania, Criminal Defense Lawyer Today for a Free Initial Consultation and Case Evaluation

If you have been charged with a white collar crime, including involvement in a Ponzi scheme or other type of criminal fraud, get experienced legal representation on your side every step of the way. Attorney Brain J. Zeiger can discuss the facts of your case with you, work to formulate potential legal defenses to your charge and, if necessary, represent you in court. A skilled lawyer can make a significant impact on the way that your case is resolved, whether that involves taking your case to trial or working out a plea deal with the prosecutor handling your case.

To schedule a free consultation and case evaluation with a Philadelphia, Pennsylvania criminal defense lawyer, please call us (215) 546-0340 or contact us online.