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Pyramid/Ponzi Scheme Fraud

Advice for Victims of Pyramid/Ponzi Scheme Fraud

Pyramid scheme fraud is one of the most well-known type of financial scam and yet, they are still surprisingly common. While matters may seem bleak if you have been the victim of such a scam, there are legal avenues you can pursue to reclaim your finances. They are named after Charles Ponzi who perpetrated one of the most famous pyramid schemes of the 20th century.

These schemes may be convoluted and complex in their execution, but they are essentially simple at their core. In a pyramid scheme, the organisation encourages individuals to join the scheme and invest capital. These members are encouraged to recruit more members with the promise of profit. Those at the top are generally paid from the investments of those at the bottom.

In the majority of cases, the organisation does not produce valuable goods, offer services or otherwise create value. As such, the only revenue come from the recruitment of members further down the chain. Clearly, this quickly becomes unsustainable and the scheme collapses. At this point, the majority of members lose their investments. 

Have I been the victim of a pyramid scam?

These frauds have become more complex and can appear legitimate. The hallmarks of a pyramid scheme are:

  • The scheme offers high profits but little or no risk.
  • You are required to pay an upfront fee to join the scheme.
  • You are required to enroll others to the scheme to continue to profit. Often, this is pitched as legitimate recruitment to advance within the ‘company’.

What should I do if I think I’m in a pyramid scheme?

  • If you suspect that you are participating in a pyramid scheme, cease all contact with the operators of the scheme immediately. Don’t invest any more money.
  • If you have passed on your bank details, notify your bank immediately.
  • Collect all documentation relating to the scheme for the authorities.
  • Remain vigilant – scammers often share victims’ details or target them again using different identities.
  • Be aware of ‘fraud recovery fraud’. This is where scammers contact victims pretending to be from the authorities and offer to help you to recover your lost money – for a fee, of course. Only deal with legitimate organisations.

How can I protect myself from pyramid scams?

First of all, if an offer is too good to be true then it usually is. Secondly, you can take precautions by:

  • Remember, if an offer is too good to be true, it usually is. High returns require elevated risk.
  • Carefully consider the product being offered. Does it have value or is it only offered to keep people investing.
  • Never take up offers of investments on the spot.
  • Do not pass out bank details or other financial information.

What can I do if I’ve been the victim of a pyramid scam?

First of all, there is no shame in being the victim of one of these sophisticated and predatory operations. By coming forward you may be able to recover some or all of your lost funds and prevent the scammers from targeting others. Secondly, contact Selachii LLP. We have extensive experience in helping clients to recoup and recover funds lost in pyramid scams. Our team have built up knowledge and experience in the workings of these schemes and the methods they use to target investors. We also understand how professional misconduct can cause you to lose money.

This puts us in a unique position with respect to helping creditors and investors to recoup their losses and in holding scammers and fraudsters to account.

We have an excellent track record in holding scammers to account including having assets frozen, even where companies have been set up using fake information. Our approach is based on close collaboration with forensic accountants and other experts, prosecution agencies (both domestic and international) to trace and recover your assets.

While it may feel hopeless, there are legal avenues open to you to recover your money. At Selachii, we explore each of these and investigate the best approach to recover your investment. 

In most cases, the recourse is to issue a winding-up petition against the company who first elicited the investment. This enforces the debt and takes the matter to the Official Receiver. At this point, our expert team of solicitors go to work investigating matters, with the help of other experts, to recover your funds. We will seek to recover the funds from the company or the individuals responsible.

In order to pursue an individual directly for repayment of funds they’ve misappropriated, there must be evidence of some kind of wrongdoing, such as misfeasance, misrepresentation or unjustified enrichment.

If the investigative and prosecuting authorities have information on the fraudster (normally because they’ve got a criminal conviction) we work to get access to this data. It’s important to bear in mind that the civil standard of proof, which only requires to be proved on a balance of probabilities, is lower than the criminal standard of beyond reasonable doubt.

As well as acting for individuals and businesses, we have also acted in class actions (also known as multi-party actions), where the same fraud has been committed against many individuals. This means that an individual unable to recover funds because of the costs and time involved can have recourse by pursuing legal action as part of a group.

 

Contact Selachii Expert Fraud Litigation Solicitors

 

We take pride in building case-winning strategies tailored to the needs and budget of our clients, and are expert in tracing and recovering assets in both the UK and overseas. If you require first-class, cost-efficient legal advice on investment fraud, or any other commercial dispute matter, please contact us.

How Selachii Can Help

Fraud is an issue that demands extreme tact as well as often needing great doggedness and attention to detail. We don’t believe in simply handing out one-size-fits-all solutions to problems. We will focus on your specific circumstances before working out the best and most cost-effective way of helping you achieve your aims.

Selachii is a dynamic litigation law firm based in Kensington, London. We put the best interests of our clients at the heart of everything we do. We work with both businesses and private individuals, giving them legal advice and support which is unique to them and their situation.

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