Ponzi Schemes Remain Prevalent In 2014; Over $1 Billion In New Schemes Uncovered

Nearly six years after the word "Ponzi scheme" became a household name thanks to Bernard Madoff, Ponzi schemes continue to proliferate and leave a trail of financial destruction in their wake as demonstrated by newly-compiled data showing more than $1 billion of newly-uncovered schemes and over 600 years in prison sentences handed down in the first half of 2014.  In the first six months of 2014, at least 37 Ponzi schemes were uncovered, with a total of more than $1 billion in potential losses.  This equated to the discovery of a Ponzi scheme (1) more than once per week, (2) every 4.9 days, or (3) every 118 hours. Included in this list are at least three Ponzi schemes with estimated losses of at least $100 million or more, with the estimated $300 million in losses in the alleged TelexFree Ponzi scheme ranking as the largest Ponzi scheme exposed in the first half of 2014.

The data, permanently housed in this database and also displayed below, is presented as a reminder that Ponzi schemes remain rampant in the United States and worldwide despite mounting government and regulatory efforts.  Indeed, the 37 schemes discovered during the first half of 2014 suggest that at least 74 schemes will be discovered in 2014 - approximately 10% more than the 67 schemes unearthed in 2013. 

A full list of Ponzi schemes uncovered in the first half of 2014, arranged by the estimated size of the scheme, is below:

 Ponzi Scheme Sentencing

In terms of sentencing, at least 66 prison sentences were handed down for those convicted for their role in Ponzi schemes in the first half of 2014, with over 600 years in cumulative sentences.  These figures are ahead of the pace for 2013, which saw 117 prison sentences for more than 1,000 years in total. These sentences ranged from mere months to decades in prison, with Hendrix Montecastro's 81 year sentence ranking as the highest Ponzi sentence handed down in the first half of 2014.  The total dollar amount of the Ponzi schemes for which sentences were levied: nearly $3 billion. 

A full database of the sentences handed down in the first half of 2014 is below:

A special thanks to Alison K. Jimenez from Dynamic Securities Analytics for her assistance in compiling the data.