Ponzi scheme attorneys represent victims of Ponzi schemes. A Ponzi scheme is a scam that involves paying current investors from money invested by newer more recent investors. The people that run Ponzi schemes generally lure new investors with promises of high returns and safe investments. Frequently the organizers of the Ponzi scheme point to the returns earned by older investors as proof of the quality of the investment. In reality, the returns that are provided to the early investors are not a result of the underlying investment, rather they are a result of the new investors money.
Anyone that suspects that they are the victim of a Ponzi scheme should consult with an attorney immediately. Ponzi scheme attorneys can review a particular investment and determine whether or not a particular investor is a victim of a Ponzi scheme or some sort of related fraudulent activity. Frequently, victims of Ponzi schemes are entitled to punitive damages that are even greater than their losses.
Due to the fact that the investment underlying a Ponzi scheme is not profitable, the schemes need more money from new investors in order to continue. At some point it becomes impossible to obtain enough new investors to maintain the returns and the Ponzi scheme fails. At this point, investors tend to withdraw their money from the enterprise and the lack of a solid underlying investment is revealed.
The schemes are named after Charles Ponzi, who cheated thousands of people into investing in a postage stamp scheme in the 1920s. Ponzi promised investors a 50% return in just 90 days. Ponzi initially intended to pay the investors off legitimately but switched to using funds from later investors to pay off earlier investors.