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Identifying and Reporting a Ponzi Scheme

It is hard to believe, but we have now passed the 10-year anniversary of the federal government bringing down Bernie Madoff’s multibillion-dollar Ponzi scheme. This scheme did ultimately do some good, as it led to Congress enacting the whistleblower program at the Securities and Exchange Commission (SEC), but many people lost a whole lot of money. Only through the dedication and bravery of whistleblowers can the schemes that continue today be brought to an end.

As such, it is important to know how to identify and then report a Ponzi scheme if you suspect fraudulent activity in your company. Below are a few examples of some red flags that could indicate the existence of a Ponzi scheme:

  • Constantly positive returns regardless of the state of the market
  • Promises of high return on investment with little to no risk involved
  • Unregistered firms or unlicensed individuals performing important work
  • Investments that have not been registered with the SEC or any other appropriate regulator on a state level
  • Lack of paperwork and general unavailability of information about investments
  • Difficulties receiving payments that often come with promises of rolling over investments or promises for higher returns in the future

Reporting the scheme

If you believe you have evidence of a Ponzi scheme, you or your attorneys can submit a tip online through the SEC’s Tip, Complaint or Referral portal, or mail or face a Form TCR to the SEC’s Office of the Whistleblower. It is important to first consult with a lawyer to understand the SEC program’s rules — you may be eligible for a substantial award if your tip leads to unique information that results in a successful enforcement action.

To learn more about the various steps you should take to report a Ponzi scheme if you believe you have discovered one, work with an experienced whistleblower lawyer at Kardell Law Group.

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  • "Steve Kardell was terrific in representing me in some very adversarial discussions with Citigroup and also later represented me in my testimony before the Financial Crisis Inquiry Commission."  -Richard Bowen, Citigroup Whistleblower

  • "Never thought my career would end like it did after 30 years of service. I was part of the first round of the so called reduction of force. I asked myself how can I be part of this with 30 years of seniority. How did they pick these 90 plus employees? Now, the culture of this organization made you question every decision they made. It wasn’t what you knew it’s was a culture of who you know. Nonetheless, I did not accept their severance package. I immediately starting looking for an attorney who would take on my case. After the initial call to Steve I had hope again. He was open and honest about everything and reassured me he would do his best for me, and he did. I had an awesome outcome. Thanks Steve you’re the best."  -S.S.

  • "Reaching out to Steve Kardell was the best decision I made. His ability to provide immediate insight and direction was very powerful, and a huge relief during a very stressful time period. For anyone struggling with a whistleblower situation, I would highly recommend at least speaking with Steve. After a 10 minute call with him, I had a better understanding of what I was dealing with. Even better, he gave me some immediate hope. In the end Steve did a better job than I thought was possible. Steve was able to get in contact with people in my organization, that I didn’t have access to. Because of his years of experience, he already has contacts in many organizations in Dallas. The entire situation was handled peacefully. I was impressed by his ability to “keep the peace”–rather than creating a battle with the organization. The reason I didn’t reach out to a lawyer initially, was because I thought it would mean an immediate end to any hope of a positive relationship with the company. Steve was able to address my concerns, and in the end I was able to continue to work for them."  -KS

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