Fifty-nine Ponzi schemes were discovered and dismantled in the United States in 2016, compared with 61 in the previous year and 70 in 2014. But losses to investors jumped to $ 2.3 billion last year, Three times more than in 2015 ($800 million), according to statistics established by “Ponzitracker” and Dynamic Securities analytics.
The record 2016 was realized by the hedge fund Platinum Partners, which deceived nearly 600 investors and in the amount of one billion dollars. For years, its founder Marc Nordlicht boasted of delivering regular and double-digit returns, at around 17% per year.
In fact, the money collected from investors was used to remunerate other investors. This is the very principle of the Ponzi pyramid. When customers wanted to get their money back, the scheme was discovered.
The States that have experienced the greatest number of these scams are again New York, California and Florida, where crooks can find many potential victims (retired, professional sportsmen …).
Traumatized by the Madoff affair, the judicial authorities have a heavy hand over the condemnations of the Ponzi Pyramids. For example, in 2016, Michael Stewart, who was operating in the real estate industry, was sentenced to 168 months in jail (14 years) for causing $169 million in losses.
When the losses exceed $20 million, prison terms range from 60 to 240 months. For the largest schemes (over $100 million), each million losses translates into an additional 21 days of incarceration.
Search for new assets
This year, 70-year-old Paul Burks was sentenced to 15 years in prison for operating a Ponzi pyramid of more than $ 1 billion and causing tens of thousands of deaths. The latter will however be able to recover between 60% and 75% of their losses, a record level for this type of business. Indeed, money diverted from the pocket of investors is most often lost forever for much of it.
Scammers are looking for new volatile and promising assets to attract their victims. They have invested in the uncontrolled sector of the new crypto-graphic currencies, which are very popular among speculators and private individuals.