Financial fraud takes can take different shapes, and scammers wear many different masks. Most states have consumer protection laws that prohibit certain deceptive business practices such as pyramid and Ponzi schemes. Bernard Madoff, one of the most famous perpetrators of a Ponzi scheme in U.S. history, was sentenced to 150 years in a federal prison after pleading to 11 counts of financial fraud. His wealth management company defrauded investors out of an estimated $18 billion before changes in the broader economy forced his hand.
Florida, along with other states, has statutes that identity such schemes and prosecute the perpetrators.
Warning Signs of a Pyramid or Ponzi Scheme
Pyramid and Ponzi schemes are illegal and very risky 'get-rich-quick' schemes that can cost a lot of people a lot of money. Here are some practices to watch out for.
- You are offered a chance to join a group, scheme, program or team where you need to recruit new members to make money.
- The scheme involves offers of goods or services of little or doubtful value that serve only to promote the scheme.
- There is a big up-front cost to pay for large quantities of goods.
- There are no goods or services being offered for sale by the scheme.
- The promoter makes claims like 'this is not a pyramid scheme' or 'this is totally legal.'
Here is a brief overview of how Florida fights against pyramid and Ponzi schemes using both Florida's "Deceptive and Unfair Trade Practices Act" and state criminal codes to protect consumers.
See White Collar Crimes, Financial Crimes, Securities Fraud, Wire Fraud and Property Crimes for more information.
||Consumer Regulation Codes 501.201-501.213, Pyramid Schemes: Section 849.091, Fraud: Section 817.034, Theft: Section 812.014, Money Laundering: Section 896.101
|Title of Act
||Florida's Deceptive and Unfair Trade Practices Act
|What is Prohibited
||Using a chain referral sales technique to get a consumer to purchase a product or service over $100 and is promised money or commission to recruit more members. Typically no legitimate product is actually sold.
|Type of Crime
||Felony or misdemeanor -- varies on nature of the crime
|Who Enforces the Law?
||Florida Attorney General
||State Prison or County Jail, Probation, Fines, Restitution, Community Service, Injunction, Revocation of Business License, Freezing Business Assets
Note: State laws are constantly changing -- please contact a Florida criminal defense attorney or conduct your own legal research to verify the state law(s) you are researching.
Most cases will be prosecuted by the Florida Attorney General's office, but there are several federal protections that may be available to you. To learn more about federal consumer protection laws, contact the following agencies:
Discuss Your Pyramid / Ponzi Scheme Charges with a Lawyer
While Florida has pyramid and Ponzi scheme laws, it's possible that you may also be charged under federal law. If you or your company are being investigated for, or have been arrested for, white collar crimes or pyramid/Ponzi scheme-related charges, it's important to seek the legal advice of an experienced white collar crimes lawyer in Florida.