What happened to my money?

Based on the allegations of the SEC's complaint, your money was taken when you made your investment with the Company and used by the Company to pay "interest" disguised as "commissions" to other investors (which the Company called "associates") as well as by the people who created the Ponzi Scheme.  The information that you received from the people at the Company was not true. The Company ran a "Ponzi Scheme."  

What is a "Ponzi Scheme?" 

A Ponzi Scheme is a type of pyramid scheme where interest (here, "commissions") paid to investors does not come from profit generated by the business, but rather from money raised from new associates/investors.

Was my investment insured?

No.  Your investment was not insured or guaranteed even though the Company may have told you that it was.

What is a Receiver?

A Receiver is a fiduciary.  In this case, she is a person that the court appoints to take control over all of the Company's money and property for the benefit of defrauded investors.  She sells the property at the highest price possible to convert it to money in order to give as much as possible back to the investors.  The Receiver can also bring lawsuits against those that created or assisted the Ponzi Scheme to recover additional funds to be paid to the investors.

How does the Receiver get the money from the Company?

The Court freezes the Company's assets and only the Receiver has the legal right to possess or use the assets. That means that the Company and its principals can no longer legally use the Company's property or money. Some of these assets, in the form of personal property, will be sold to the highest bidder to bring money into the estate for eventual distribution.  Investors cannot seek to take this property for themselves otherwise they will be in contempt of Court.

Will I be repaid all my money?

Usually not. The reason is because some of the money may have been spent on things like food, travel and entertainment.  If that happened there is no item to sell and no way to get back that part of the money.  Some of the money may have no paper trail to determine where it went.  In such cases, it is often very difficult to recover such money.   

How is my claim determined?

It is likely that the claims will be determined on a net basis – that is total cash invested by an investor minus total cash paid to an investor.  However, the a claims procedure has not yet been established.  The Receiver will be filing a motion to establish claims procedure, which must be approved by the Court.  When the Court enters the order approving the motion to establish claims procedure, the Claim Form will be posted on this website under "Claims."

What are the steps the Receiver must take prior to distributing funds to creditors?

1.  Locate and sell all of the property and money that the Receiver can find.

2.  Sell non-cash property at the highest possible price to convert it to cash.

3.  Bring lawsuits against the principals and/or those that may have assisted the principals in the    fraud.

4.  Gather all of the Investor's information in order to determine each investor's allowed claim.

5.  Verify that all investor information is correct.

6.  Distribute money to investors.

 Are all investors treated equally?

Yes, each investor will be paid the exact same percentage on his or her claim as all other investors.  This is called "pro-rata" distribution.  Thus, if the Receiver has $100,000 to distribute and there are a total of two creditors – one with a $100,000 claim and the other with a $300,000 claim, the creditor with the $100,000 claim will receive $25,000 while the creditor with the $300,000 claim will receive $75,000.  Thus, both creditors received 25% of their claim.

Why does it take so long for the Receiver to do her job?

The Receiver must first search for and obtain possession of all assets and money that can be located.  This may be easier in the case of homes and other real estate.  However, it is extremely time consuming in the case of hidden money.  Next, the Receiver has to liquidate assets and obtain the highest price possible.  To do this, the Receiver must actively "shop" the property over a long enough period of time in order to get the highest possible price.  Moreover, the Receiver must investigate and bring lawsuits against persons that may have assisted the principals in the fraud or have illegally received money from the principals.  Finally, the Receiver must be sure that all associates/investors claims are accurate before money is released, otherwise she will have no way to get it back.  This entails a detailed claims process.  The larger the number of investors, the longer this process takes.

Can you make my claim a priority?

No.  In most Ponzi Scheme cases, there are hundreds of investors each wanting special treatment.  Legally, the Receiver must treat all investors exactly the same.

How does the Receiver and her lawyers and accountants get paid?

The Receiver and her lawyers and accountants are paid an hourly fee by the Court from the funds collected.  The Receiver must file an application with the Court and the Court will only pay the Receiver a reasonable fee based on the services rendered and the results obtained.  In many cases, Receivers are unsuccessful in collecting any funds.  Thus, to a certain extent, the Receiver and his professionals work on a "contingency" basis.

Do I have to return any "profit" that I received?

If you have received more money than you invested in the Company you should return the additional money to the Receiver so that more money is available to other investors who were not as fortunate to receive their initial investment back.  Moreover, the Receiver may sue you to recover such excess "profit".