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Florida Ponzi scheme laws

A Ponzi scheme is a type of investment fraud that pays individuals who invested earlier in the scheme with the money the swindle takes in from later later investors. This creates the illusion that the enterprise is profitable and keeps law enforcement at bay – while it lasts. For years, Florida has unfortunately proven to be fertile ground for these types of schemes, whether involving gold bullion, fake stocks or real estate.

Ponzi schemes are named for Charles Ponzi, who perpetrated a large-scale investment scam of the kind that now bears his name. The red flag in any such scheme is an offer of above-market returns on investment in a short time. While many of these schemes end up in federal jurisdiction – due either to the subject matter or size of the case – the Sunshine State has also enacted laws to protect its citizens and help them to recover on their fraud claims.

In Florida, the Deceptive and Unfair Trade Practices Act is the law under which Ponzi schemes are investigated and prosecuted and under which consumers can recover. The state’s enforcing authority may investigate the actions alleged to comprise a Ponzi scheme, bring a declaratory judgment action or injunction against those involved in the actions, or refer the case to law enforcement for prosecution. In addition to referral for criminal prosecution, the enforcing authority can also levy a civil penalty against those who violate the act.

Ponzi schemes often cause considerable financial damage and, in some cases, have ruined the lives and livelihoods of victims. While governments do what they can to protect consumers, fraudsters will continue to try and separate victims from their hard-earned money. This means that consumers must also be vigilant and vet any investment opportunities that seem too good to be true.

Source: FindLaw.com, “Florida pyramid and Ponzi scheme laws,” accessed Mar. 26, 2018

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