Bad year for US Ponzi schemes
By Curt Anderson |
December 30, 2009, Wednesday
|
Print Edition
Print Edition
IT was a rough year for Ponzi schemes in the United States. The recession unraveled nearly four times as many scams as fell apart in 2008, with "Ponzi" becoming a buzzword again thanks to the collapse of Bernard Madoff's US$50 billion plot.
Tens of thousands of investors watched more than US$16.5 billion disappear in 2009, according to an Associated Press analysis.
While the dollar figure was lower than in 2008, that's only because Madoff - who is serving a 150-year prison sentence - was arrested in December 2008 and didn't count toward this year's total. In all, more than 150 Ponzi, or pyramid, schemes collapsed in 2009, compared to about 40 in 2008.
The scams ranged in size from a few hundred thousand dollars to the US$7 billion bogus international banking empire authorities say that the jailed financier Allen Stanford orchestrated, as well as the US$1.2 billion scheme they say was operated by disbarred Florida lawyer Scott Rothstein.
Both have pleaded not guilty.
"The financial meltdown has resulted in the exposure of numerous fraudulent schemes that otherwise might have gone undetected for a longer period of time," said Lanny Breuer, assistant attorney general for the US Justice Department's criminal division.
A Ponzi scheme depends on a constant infusion of new investors. This year, when the pool of people willing to become new investors shrank, and existing investors clamored to withdraw money, scams collapsed across the country.
Tens of thousands of investors watched more than US$16.5 billion disappear in 2009, according to an Associated Press analysis.
While the dollar figure was lower than in 2008, that's only because Madoff - who is serving a 150-year prison sentence - was arrested in December 2008 and didn't count toward this year's total. In all, more than 150 Ponzi, or pyramid, schemes collapsed in 2009, compared to about 40 in 2008.
The scams ranged in size from a few hundred thousand dollars to the US$7 billion bogus international banking empire authorities say that the jailed financier Allen Stanford orchestrated, as well as the US$1.2 billion scheme they say was operated by disbarred Florida lawyer Scott Rothstein.
Both have pleaded not guilty.
"The financial meltdown has resulted in the exposure of numerous fraudulent schemes that otherwise might have gone undetected for a longer period of time," said Lanny Breuer, assistant attorney general for the US Justice Department's criminal division.
A Ponzi scheme depends on a constant infusion of new investors. This year, when the pool of people willing to become new investors shrank, and existing investors clamored to withdraw money, scams collapsed across the country.
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