New York residents may have heard about Bernie Madoff and his Ponzi scheme. In a Ponzi scheme, funds from new investors are used to pay off previous investors. This type of investment fraud usually collapses when there is no new money coming in. One of the signs of such a scheme is that the investment has relatively little risk and a high rate of return. In most cases, only high-risk investments offer high rates of return.
If an investment offers the same level of return each year, it could be a part of a Ponzi scheme. While the market may offer similar rates of return over long periods of time, growth rarely occurs in a straight line. Before putting any money into an investment, it may be worthwhile to check if it is registered with the SEC. Furthermore, the person or entity offering the investment should also be registered with the SEC.
One of the surest signs that an individual has invested in a Ponzi scheme is if they don't get paid on time. Additionally, it may be difficult or impossible to get money out of an investment upon request. In some cases, an investor may be pressured into keeping their money where it is or offered higher returns for doing so.
Those who are under investigation for money laundering or running a Ponzi scheme may wish to talk with an attorney. Legal counsel may come up with defenses to any charges that an individual may face. For instance, it may be possible to argue that an individual was using investor funds for a legitimate project that simply didn't work out. It may also be possible to argue that investors knew that they may not see their money back.