View Our Practice Areas

What are the legal implications of operating a Ponzi scheme?

Fraudulent activity in relation to creating Ponzi schemes is considered a relatively common white collar crime. It is a type of investment fraud, since the organizers earn money through scamming new members of the scheme.

Ponzi schemes usually work by falsely promising a low-risk investment for extremely high returns.

Why are Ponzi schemes not viable?

Ponzi schemes are fraudulent and not viable because they do not have a sufficient amount of actual earnings. One of their defining characteristics is the fact that their main source of income comes from new members. This means that it is not a legitimate business, and only established members are earning significant profits.

How can Ponzi schemes be identified?

If a company is widely advertising a low risk investment with a promise to yield high returns, it is likely that it will be flagged at some point as a Ponzi scheme. It will also raise a red flag if a company is seeming to be desperate for new members, and spending more time on trying to recruit new members than on selling their product.

Ponzi schemes can also be identified through paperwork issues. Many sellers that are a part of Ponzi schemes may be unlicensed and lack any paperwork whatsoever. Their business and organizational strategies might also be mysterious and overly complex.

Any type of Ponzi scheme is fraudulent, but many companies may appear to be Ponzi schemes when they are actually completely legal. If you have been accused of operating a Ponzi scheme, it is important to defend yourself and protect your company's reputation.

Source:, "Ponzi Schemes," accessed Nov. 14, 2017

No Comments

Leave a comment
Comment Information

Strong legal advocates for residents throughout the Dayton area.

Contact The Firm

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

Email Us For A Response

Office Locations

West Chester Office
9100 West Chester Towne Centre Drive
Suite 210
West Chester, OH 45069

Phone: 937-401-2526
Map & Directions

Dayton Office
40 N. Main Street, Suite 1900
Dayton, OH 45423

Phone: 937-401-2526
Dayton Law Office Map