On behalf of Mihalek Law posted in Securities Law on Friday, April 10, 2015.
Ponzi schemes are just one of many forms of securities fraud that could be perpetrated against an investor. Recently a man who formerly played professional football was accused of being involved in such an endeavor.
Upon retiring from professional football, along with an associate, the 36-year-olld man founded three Capital Financial firms. According to the federal fraud complaint filed against the man and his business associate, between July 2012 and February 2015, he and his partners raised more than $31 million from at least 40 investors. In some cases investors were told that their money was backed by a professional athlete’s contract and that the interest rates on their money would be up to 18 percent.
Of the millions raised, approximately $18 million was advanced to athletes. It is alleged however that only some of the loans were legitimate. The football player and a colleague are accused of each taking approximately $13.7 million.
Despite having only received just over $13 million in loan repayments from the pro athletes, the financial firm made payments of approximately $20 million to those who invested. According to the Securities Exchange Commission, the missing millions needed to pay back the money that was missing was taken from other investors.
Ponzi schemes can often continue for years without detection. When they are uncovered and proven, investors can struggle to get their investments back. Because this task is so difficult investors who find they are in this situation should contact an attorney. That individual can help determine the best way to proceed. It is likely that the investors in this situation have done this very thing.