From poker to picante, it seems the Ponzi scheme has solidified itself as the new fraud du jour. A California woman has filed a civil complaint alleging that she was fired from her position as an assistant manager at Taco Bell after she refused to stop participating in a "mandatory Ponzi scheme for all employees." The case, styled Jeorgina Cervantes de Gomez v. Robert Coe, case number 1383277, was filed in California Superior Court on October 17. Along with back pay, Gomez is also seeking compensatory and punitive damages under the California Labor Code.
Gomez was an assistant manager at a Taco Bell in Goleta, located in Santa Barbara County. According to the complaint, each employee was required to contribute a small portion of their paycheck. The complaint states as follows:
"For approximately two years, TB's restaurant manager for the Fairview/Calle Real location, Doralinda Vargas, pressured plaintiff and other subordinates to participate in a secretive, Mexican-inspired Ponzi scheme, sometimes called a 'Tanda.' Ms. Vargas forced each employee to contribute one hundred dollars ($100) from his or her paycheck every payday to fund this illegal scheme. Growing tired of being forced to contribute the money from her paycheck each payday, plaintiff refused to participate any further.
"On or about June 1, 2011, Ms. Vargas threatened plaintiff with termination if plaintiff did not agree to continuing giving back to Ms. Vargas every payday $100. Plaintiff refused to participate in this unlawful act. As a result, plaintiff's employment was terminated with no notice."
More notable than the allegations is the growing inclination of both the news media and the general public to describe fraudulent schemes as Ponzi schemes. While scant details are known about Cervantes' complaint other than that reported, the simple extortion of money does not qualify as a Ponzi scheme. Instead, a Ponzi scheme requires some fraudulent promise of larger returns through a non-existent investment operation.
According to Black's Law Dictionary, a Ponzi scheme is “[a] fraudulent investment scheme in which money contributed by later investors generates artificially high dividends for the original investors, whose example attracts even larger investments. Money from the new investors is used directly to repay or pay interest to earlier investors, without any operation or revenue-producing activity other than the continual raising of new funds.” While the allegations in the complaint, if true, are deplorable and likely criminal, their classification as a Ponzi scheme may be pushing the envelope.