Who gets prosecuted when Ponzi/Pyramid Schemes are caught?

Question

Obviously, the initiating member will get the book thrown at him.  The Charles Ponzi and the Bernie Madoff.   Call this person, the capstone of the scheme, or level 1.

But, what about everyone else who profited from the scheme?

Suppose all of the members at level 2 and level 3 profit from it as well.   Suppose members of level 4, are the ones who broke even.  All at the expense of members of levels 5,6,7,8,9, and 10...and perhaps numerous more lower members.

Each of the profiting members of the immediate levels beneath the capstone member, have individually marketed the same Ponzi Scheme.   Yet, are they also prosecuted?   They did have a net benefit from the same illegal activity.

Ranger · Accepted Answer

It is easy to prove the Capstone knew it was a fraud. It is harder to prove anyone else knew it was a fraud. If there is enough evidence to prove fraud on anyone else, they get prosecuted too.

papasteve · Answer

Not all the guilty people that should.   That is one of the issues about corporate criminals. if a person commits a crime where is costs someone $200 , he has to repay the $200 plus a fine, 2-10x for a penalty. Yet Corporate criminals regularly make millions doing something illegal and at most pay 10% of what they stole. That has to change. It makes sense to me. If a corporation did something illegal That made them a 5 million dollar profit, then at the very least they should give up that profit. Then talk about a penalty for the crime. And then look to out in jail anyone who caused the crime, if they did it on purpose, or knew what they did was illegal. I can not see anyone disagreeing with that, if they want to be fair.  But as I said Not all will be punished. But usually the top 2-10 people.

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Who gets prosecuted when Ponzi/Pyramid Schemes are caught?

2 Answers