Ponzi Schemes Are At Their Highest In a Decade

A Ponzi scheme is a type of fraud whereby crooks steal money from investors and mask the theft by funneling returns to clients from funds contributed by newer investors. Investor money ensnared in alleged Ponzi schemes are at their highest level in a decade, with fraudsters bilking unsuspecting investors. State and federal authorities uncovered 60 alleged Ponzi schemes last year, with a total of $3.25 billion in investor funds — the largest amount of money unearthed in these scams since 2010 and more than double the amount from 2018. Bernie Madoff ran the largest Ponzi scheme in history — a $65 billion scam encompassing thousands of investors that was uncovered in 2008. He is now serving a 150-year sentence in federal prison. While it’s too soon to tell if last year’s total was an anomaly, some experts fear it could herald a return to more sinister times. The challenge with Ponzi schemes is that investors are unlikely to know if they’re victims until the stock market crashes, and most of the time investors don’t get their money back. What the SEC is warning people to do is remember that if it sounds too good to be true, it probably is.