Actions that amount to Ponzi schemes continue to be irresistible to some people, as seen recently in a U.S. Securities and Exchange Commission (SEC) lawsuit filed in Florida. Two men allegedly acted fraudulently and are accused of helping to raise over $190 million dollars to keep their Ponzi-style scheme alive. They obtained the cash from over 173 investors who hoped to gain a profit from their investments.
Instead of gaining a profit, investors learned that these two front men are facing stiff penalties for their role in this scheme. The kingpin of the Ponzi scheme, disbarred Florida attorney Scott Rothstein, is now serving 50 years in prison. Investors were promised that their funds were protected, which also was untrue.
The men are charged with selling investors phony legal settlements fabricated by the attorney who was convicted of originating the scheme. Profits were to be derived from payouts of settlements from sexual harassment and workplace discrimination lawsuits. All cases and paperwork were fakes and included forged documents and creation of fictitious plaintiffs and defendants.
The two men under suspicion of collaborating with the convicted attorney deny guilt; investors are seeking compensation under Florida securities fraud law. Charges against these two men include that they helped the attorney fuel this fraudulent moneymaking scheme. They claim that they also are victims even though they continued to promote success of their venture as it collapsed around them.
A pyramid scheme, or Ponzi scheme, of this magnitude could only happen with the involvement of many individuals, including some who should be trustworthy, such as judges, politicians and others. The extent of this case also involves criminal actions by bank executives, close friends and relatives, and included laundered Mafia money.
As the old adage advises, if it seems too good to be true, it probably is. Persons who feel they may have been drawn into a Ponzi scheme should contact a securities fraud law firm to seek legal recovery and compensation.
Source: Bloomberg.com, "SEC Sues Two Florida Men Over Claim They Fed Rothstein Fraud," Joshua Gallu, May 22, 2012