Two common types of white-collar crime in Florida are Ponzi and pyramid schemes. While both of these are types of financial fraud, they involve different types of conduct. Being convicted of engaging in either of these crimes can result in substantial fines, prison sentences, and orders to pay restitution.
What is a Ponzi scheme?
In a Ponzi scheme, an investment manager will fraudulently try to attract investors by promising high rates of return combined with little risk. When the investors give the manager money to invest, the manager does not invest the money and instead misappropriates it. The manager will continue to try to attract new investors and use their money to pay returns to the older investors. Eventually, the system will collapse when the fraudster can no longer attract enough investors to support the scheme.
What is a pyramid scheme?
Under criminal law, pyramid schemes are white-collar crimes in which an initial schemer tries to attract other investors with an opportunity such as to sell a product. Each recruited investor must then recruit other investors and so on. The recruited investors are responsible for paying returns to the people who recruited them. The people who receive the returns must share them with people higher on the pyramid.
Being charged with financial fraud for operating a Ponzi scheme or pyramid scheme can result in serious penalties if you are convicted. People who learn they are being investigated for one of these types of white-collar offenses may want to talk to experienced white-collar criminal defense lawyers who practice in both state and federal court. An attorney might be able to negotiate with the prosecuting attorney to avoid a criminal indictment from being filed. If the person is indicted or charged, the attorney may analyze the evidence to identify problems in the government’s case.