What is a Ponzi scheme?

What is a Ponzi scheme?
What is a Ponzi scheme?

In the recent past, you must have heard a lot of news about Ponzi schemes. They guarantee exciting promises but lead people towards frustration and hassle in the long run. Therefore, it is important for all people to have a clear understanding of “What is a Ponzi Scheme”. Then you will get the opportunity to avoid frustration linked with them.

What is a Ponzi scheme?

A Ponzi scheme can simply be defined as investment fraud. It promises amazing returns for all investors. In fact, investors are convinced that they will be provided with amazing returns via the funds that are raised from newly joined investors. Due to this reason, existing investors would be tempted to get new investors into the scheme as well.

For a Ponzi scheme to work, it should have a continuous flow of investors. In such a situation, organizers of the Ponzi scheme will be able to win a higher amount of money within a short period of time. But when the Ponzi scheme fails to recruit new investors, it will collapse.

The first-ever Ponzi scheme was started back in 1920 by a guy named Charles Ponzi. He cheated thousands of people who lived in New England by promising them to deliver 50% of their investments within 90 days. Since then, Ponzi schemes have evolved along with time. Therefore, it is important for people to have a clear understanding of how to avoid them.

What can you do to avoid Ponzi schemes?

  • Always be skeptical

If you are approached by an individual who tries to sell a massive investment, you should be skeptical about it. The investment scheme would look promising. In other words, it would convince you that you will be able to get amazing returns without any risk. This is a common example in a Ponzi scheme. When you are provided with such an investment plan, you should be extra cautious. In most cases, returns would be generated by a thing that you haven’t heard before. Or else, you would think that it is impossible to generate such returns via the method explained. If you don’t have any idea at all, you are encouraged to go ahead and seek the assistance of someone who has experience and knowledge about the subject.

  • Be suspicious when you come across unsolicited offers

During a Ponzi scheme, a person would get in touch with you unexpectedly. For example, you will be asked to come and take part in an investment seminar. You should always look at such instances with a suspicious eye. If you are a senior citizen, you should keep in mind that you are in the high-risk category of being subjected to investment scams. People in your age category are more vulnerable to such scams as well. Therefore, you need to be suspicious when you are provided with an unsolicited offer.

  • See whether the investment opportunity is a registered one or not

Once you are provided with an investment opportunity, you should see whether it is registered or not. Usually, the Ponzi schemes are unregistered. They will not be provided with registration by the controlling authorities due to nature. You can simply ask for additional information about the investment from the individual who promotes them to you. If that person tells you that the investment opportunity is not registered, you need to inquire why it is not. It is true that an investment opportunity doesn’t need to be registered at all times. However, moving forward with a registered investment opportunity would provide you with the opportunity to keep peace of mind. It can also keep you away from fraudulent Ponzi schemes. Therefore, it is a must for you to see whether the investment is registered or not.

  • Analyze the seller

The seller who’s trying to promote the investment opportunity to you should also be analyzed properly. If you get in touch with FINRA, you will be able to get additional information about the seller. Here, you need to see whether the seller has obtained the required licenses. In addition, you should keep an eye on all sorts of negative information about the seller as well. If there are negative remarks or if the seller has not obtained the required licenses, you should never go for the investment opportunity. There is a high chance associated with it to be a Ponzi scheme and it’s better to be safe.

  • Be 100% sure about the investment before you spend money

Most people in today’s world do the mistake of spending their money before they get 100% sure about the investment opportunities. This can be considered as one of the most prominent reasons why people become victims of Ponzi schemes. If you don’t understand any part of the investment opportunity, you should ask for additional information. Plenty of resources are available on the internet for you to get the required information. By going through those details, you will be able to get a better understanding of how to invest your money. Then you can also evaluate the opportunities that are provided to you. This would improve your knowledge about Ponzi schemes as well and you will be able to stay away from them.

  • Report the Ponzi schemes that you come across

Last but not least, you need to be careful to report all the Ponzi schemes that you come across in day-to-day life. By going this, you will get the opportunity to save another person from becoming a victim of it. As soon as you come across a Ponzi scheme, you need to file a case with FINRA. Or else, you can get in touch with the Securities and Exchange Commission to do it. When you report the Ponzi Scheme, you will be ensuring that you save lots of other people from falling into the trap as well.

Final Words

Now you have a clear understanding of the answer to the question “what is a Ponzi scheme”. Any person can become a victim of a Ponzi scheme. Hence, it is extremely important to keep your eyes open and make sure that you don’t become a victim. Now you have a clear understanding of how to avoid the frustration associated with Ponzi schemes. As the next step, you need to keep an eye on the Ponzi schemes around you. If you come across any, you should be careful to stay away from them.

White-collar crime lawyer in Colorado

White-collar crime lawyer in Colorado

Are you charged with a white-collar crime?

If you are facing white-collar offenses, the only one that can help you is an experienced white-collar crime lawyer in CO. Only a few lawyers from across the country are admitted to practice in the federal courts. Federal/white-collar crimes are usually prosecuted in federal court. White-collar crime attorneys are devoted to defending clients with federal felonies.

Ever since the economic catastrophe that occurred in the year 2008, the media and the federal government have been obsessed with white-collar crimes. The federal government handles white-collar crimes very aggressively. It means that there’s no room for leniency when your career, employment, and reputation are at stake.

Some pedestrian examples of white-collar crimes are internet fraud, bank fraud, embezzlement, tax evasion, extortion, kidnapping, larceny, identity theft, etc. If you have been accused of any federal/white-collar crime, you need an experienced white-collar crime attorney in CO to build your defense case.

Common crimes that a white-collar attorney deal with

Here are some examples of federal crimes:


This involves an act by an individual to limit or fake valuable assets and items. A common example of counterfeiting is fake currency. The US bill notes and coins are designed ornately to prevent counterfeiting. Counterfeiting can not only hurt the general public but also investors, leading to a bad image of the US brand. In addition to that, t-shirts, pants, jewelry, and shoes can be counterfeited as well.


Fraud is a primary class of federal/white-collar crime which includes other white-collar crimes such as internet fraud, identity theft, bank fraud, insurance fraud, cell phone fraud, healthcare fraud, credit card fraud, etc.

Fraud happens when someone distorts information, does not provide key information, and misuses the untrue information lie about the past, future, or present. The purpose of fraud is financial gain. However, if you have been wrongly accused of fraud and are being interrogated by federal agencies like the FBI and IRS, it is important to seek advice from a Colorado White-collar crime lawyer.

Extortion, bribery, and embezzlement

These white-collar crimes involve using influence to bend the will of an individual or an organization for financial gain. While bribery involves the act of giving money to buy favors, embezzlement involves the unethical and illegal appropriation of funds/money entrusted for the purpose of investment.

Extortion is the act of forcing individuals to provide remuneration in exchange for security. If the remuneration is not provided, the potential subject could be harmed by the party.

Other federal crimes include:

  • Police impersonation
  • Money laundering
  • Blackmailing
  • Shell games
  • Real estate fraud
  • Odometer fraud
  • Tax evasion
  • Federal estate evasion
  • Human trafficking
  • Sex crimes
  • Publishing of fake coupon
  • Racketeering
  • Over-billing clients
  • Pyramid schemes

What white-collar crime is considered a felony?

White-collar is a crime committed by those wearing suits to work. Corporate crimes done despite having an official post in the office are also known as white-collar crimes. While some cases get bounced to the federal court, other crimes such as theft are prosecuted directly in Colorado courts.

As the federal government handles white-collar crimes aggressively, the consequences of a white-collar felony are dire. If you are ever accused of white-collar crime, not only do you lose your job but it also affects your future employment. You would never be able to work with a reputable corporation as most employers check the criminal record.

Each white-collar crime is prosecuted differently, depending on the evidence. You need a legal defense strategy to bail yourself out of white-collar crime.

A white-collar crime lawyer can help you build a strong legal defense plan to protect your constitutional rights.