SEC Takes Down Five in Florida Ponzi
Florida continues to be a hotbed for financial crimes. The state huge population of older, wealthy and retired Americans means there are ample opportunities for the enterprising financial fraudster to try out any number of nefarious schemes, including the most notorious of them all, the Ponzi Scheme.
Even in the aftermath of the Madoff scandal, Ponzi schemes continues to billow and burst across the country. And unfortunately Florida may be home to more of them than any other state. The latest Ponzi was broke up by the Securities and Exchange Commission, which charged five unregistered salespeople in South Florida for unlawfully selling securities in a massive Ponzi Scheme that had swelled to almost $1.2 billion in assets.
According to the SEC's complaints, the salespeople brought in millions of dollars in commissions for themselves largely by promising elderly wealthy investors guaranteed returns on the investments. This too-good-to-be-true mirage helped the Woodbridge Group of Companies, the umbrella that organized and directed the holdings of the Ponzi, swell to its billion-dollars plus size. The salespeople were not, however, registered broker-dealers and thus were not lawfully permitted to sell securities.
The Woodbridge consortium began as a real estate company which went bankrupt in 2017. The owners of the company have already been charged by the SEC with running a Ponzi scheme that cost thousands of investors, who bought notes that were not tied to the market, millions of dollars. Indeed, one of the top revenue producers for Woodbridge brought in a staggering $243 million in sales from more than 1,600 investors; all of the securities were unregistered.
Common Signs of a Ponzi Scheme
Once you're inside a Ponzi Scheme, it can look and feel a lot like a normal investment opportunity, especially if the scheme operator is adept at creating false investment documentation. The key is not to get draw into a Ponzi Scheme in the first place. The most common signs of these frauds are evident from the beginning - that's when you have the greatest chance of identifying them.
- Inflated investment returns
- Guaranteed investment returns
- Tax-free investment returns
- Vagueness about the actual investments
- Overly simplified investment documentation - or none at all
- Lack of true expertise or history in sophisticated investing
