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Former Assistant District Attorney
Former Assistant U.S. Attorney

2 men indicted for role in Ponzi scheme

| Jun 7, 2021 | Federal Crimes

Ponzi schemes are among the most enticing forms of fraud because they often generate quick rewards for those who get involved early on. Through Ponzi schemes, the principal actor pays investors dividends by collecting more money from new investors. The investors typically believe they are putting their money into a legitimate business, but the principal actors are the ones who reap the benefits. Recently, two Mississippi men were indicted for participating in a Ponzi scheme that allegedly misled over 50 investors.

The men are accused of enticing stakeholders to invest in an enterprise that purchased timber rights from property owners and sold those rights to lumber mills. The indictment states that the men assured their investors that they were actively involved in the enterprise, from inspecting the properties to handling the contracts with the lumber mills. The investigators also reported that the men promised that investors would receive payments before either of the two men collected any profits.

What went wrong?

Apparently, no such contracts with lumber mills existed. According to the indictment, the broker organization was the same company owned by another Mississippi man who was convicted in 2018 for his role in a multi-million dollar Ponzi scheme. The FBI and other agencies are actively pursuing restitution for the dozens of investors who claim they lost money to the three men.

The two are now facing multiple federal charges including securities fraud, wire fraud and scheming to defraud investors. Since the primary actor in this so-called Ponzi scheme has already been convicted, this may complicate their efforts for seeking justice. Fighting such complex charges often involves building an equally complex defense strategy.