Texas Lawyers Blog


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Thursday, April 16, 2009

Investment Fraud, Negligence, and Ponzi Schemes

Ponzi Schemes are fraudulent investment scams that pay returns to investors from their own money or money paid by subsequent investors rather than from any actual profit earned. Their name comes from Charles Ponzi, who duped thousands of people into investing in a postage stamp speculation scheme back in the 1920s. Ponzi thought he could take advantage of differences between U.S. and foreign currencies used to buy and sell international mail coupons. Ponzi told investors that he could provide a 40% return in just 90 days compared with 5% for bank savings accounts. Ponzi was deluged with funds from investors, taking in $1 million during one three-hour period. Though a few early investors were paid off to make the scheme look legitimate, an investigation found that Ponzi had only purchased about $30 worth of the international mail coupons. Now the term "Ponzi Scheme" applies to investment scheme that "rob-Peter-to-pay-Paul", money from new investors is used to pay off earlier investors until the whole scheme collapses.

Breach of Fiduciary Duty, Conflicts, and Failure of Checks and Balances

With the Madoff and Stanford Group Investment Fraud Allegations has come other allegations that stock brokers, lawyers, accountants, fund managers, investment firms, auditors, and other companies and people that should have recognized fraud have committed negligence, fraud, breach of fiduciary duty, conflicts of interest, and other violations of law that may make them liable for investors' losses. Many investors are beginning to realize that their may be a way to recoup some or most of the money that they lost from their retirement funds, life savings, or other investment.

For more information on large investment fraud news and allegations or seeking compensation for a breach of fiduciary duty, conflict of interest, or failure of checks and balances, please go to the following web page on Investment Fraud, Ponzi Schemes, Conflicts of Interest, Negligence, and Breach of Fiduciary Duty Claims.