Ponzi schemes are being uncovered in record numbers. The SEC is investigating cases all over the country, that while not on the scale of Madoff, are just as devastating to investors. In an action filed this month entitled SEC v. Millennium Bank, the defendants were allegedly conducting a Ponzi scheme via an offshore bank that raised over $68 million from investors. Investors were solicited to purchase CDs which defendants claimed paid extraordinary returns. What actually happened is the money was simply transferred offshore to the defendants’ accounts. The SEC also obtained a preliminary injunction in March against an individual in Virginia who bilked $11 million from about 31 investors through a fraudulent offering scheme in which he sold limited partnership interests in three entities. He claimed annual returns as high as 22%. As with the Millennium case virtually none of the money raised was actually invested.
Now that the world is aware of the Bernie Madoff scheme, many other long running schemes, some as long as 13 years, are coming to light. This is sad news for many investors because it will be difficult to recover any money from these con men. However, there may well be others who assisted the con men who have liability. We are looking into several potential claims of this sort. Going forward investors should be very wary of any nontraditional investment opportunities and skeptical of anyone claiming extraordinary results on investments.
If you have question relating to this subject, contact Jay Aughtman (Jay.Aughtman@beasleyallen.com) or Scarlette Tuley (Scarlette.Tuley@beasleyallen.com) or 800-898-2034.
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