Where you stand depends on your role
A Ponzi scheme pays earlier investors with money from later ones rather than from real profits, and it tends to collapse when new money slows. Once it does, people end up in very different positions. Some lost principal and want to know what can be recovered. Others were paid more than they put in and may be asked to give some of it back. Still others introduced friends, family, or clients to the investment, sometimes for a fee, and are now fielding questions from regulators or prosecutors. One scheme can put a single person in more than one of these positions, so the first step is identifying which ones apply to you.
Clawback letters and claims deadlines
When a court appoints a receiver, or a bankruptcy trustee takes over, that person usually reconstructs the money flows and may pursue investors who received payments, including investors who knew nothing about the fraud. How far back those claims reach and how the amounts are calculated are technical questions, and they are not settled by what your account statements showed as profit. A claims process for investors who lost money usually has a deadline, and missing it can cost you your place in any distribution. Gather your subscription documents, every statement, records of each transfer in and out, tax forms you received, and any messages with the promoter. Respond to official letters through counsel rather than setting them aside.
If you are being asked about your role
People who sold or recommended the investment sometimes learn they are the subject of an SEC inquiry or a criminal investigation, and the line between an enthusiastic investor and a participant often comes down to what you knew and when. Avoid contacting other investors to compare stories or reassure them, and keep your messages, even the embarrassing ones. In a first meeting we go through how you came into the investment, what you were paid and for what, and what you said to others about it. We also look at whether claims from the receiver, from other investors, and from government agencies are likely to overlap, so that a response to one does not undercut another.
