Ponzi Scheme Discoveries and Sentences Dropped Sharply In 2015

In exclusive data compiled by Ponzitracker.com, both the number of uncovered Ponzi schemes as well as the number of sentences handed out to individuals for their role in Ponzi schemes appear to have decreased sharply in 2015.  The statistics, which come over seven years after the discovery of Bernard Madoff's massive Ponzi scheme, show a significant drop in the number and severity of Ponzi schemes in 2015 - a welcomed trend that will no doubt be trumpeted as a product of increased enforcement efforts.  However, while certainly encouraging, it remains to be seen whether this reversal is simply an anomaly.  

In 2015, at least 61 Ponzi schemes were uncovered with a collective total of more than $800 million in potential losses.  The number of uncovered schemes was down approximately 10% from the number discovered in 2013 and 2014.  Further, the $800 million of estimated losses in 2015 was 50% less than the estimated losses in 2014 and nearly 75% less than the estimated losses in 2013.  Similarly, the average Ponzi scheme size in 2015 of approximately $13.2 million was 40% less than 2014 and 70% less than 2013.  The median Ponzi scheme size also significantly decreased from $6.8 million in 2014 to $4.5 million in 2015 - a 33% decrease.  With 61 schemes discovered, this correlated to a new Ponzi scheme uncovered roughly every six days in 2015.  The average scheme losses also declined compared to previous years, with only one scheme in 2015 having estimated losses of $100,000,000 or more.  At least six uncovered schemes in 2013 had losses of $100 million or more, while 2014 saw at least five schemes with at least that amount of losses.

Similarly, the number and severity of sentences handed down to those convicted for their role in a Ponzi scheme in 2015 also sharply decreased.  In 2015, 79 individuals were sentenced to nearly 700 years in cumulative sentences.  Both the number of individuals sentenced and the cumulative sentences handed down were approximately 50% less than sentences handed down in 2013 and 2014.  Additionally, the average sentence decreased approximately 20% from 2014 to 2015.  Curiously, the percentage of female defendants receiving these sentences declined by more than 50% from 2014 to 2015.  The sentences handed down ranged from mere months to decades in prison, with Joyce Allen's 30-year sentence for a $20 million Ponzi scheme ranking as the highest Ponzi sentence handed down in 2015.  

While the 2015 statistics constitute notable drops compared to 2013 and 2014, the discrepancies are even more apparent when looking back to the 2009, 2010, and 2011 time periods that marked the high-water marks in Ponzi scheme discoveries.  Then, fresh on the heels of the discovery of Madoff's massive scheme and during the middle of an financial crisis that caused the implosion of countless schemes, the number of Ponzi schemes discovered annually averaged over 100 and included the discovery of Madoff's $17 billion scheme in 2008 and Stanford's $7 billion scheme in 2009. 

A chart showing the last four years of statistics shows just how significant this decrease was in 2015:

A search for answers in the data itself does yield some interesting insights.  The immediate takeaway is that Ponzi schemes are declining in all measurable areas - number discovered, average size, and total losses.  Ponzi scheme sentences are also dwindling correspondingly as a result of the declining number of schemes.  At least part of this decrease can feasibly be attributed to a burgeoning economy.  Some can also be attributed to increased and more sophisticated enforcement efforts, with the decreasing average scheme size suggesting that regulators are becoming more adept at shutting down schemes before they can grow exponentially.  Similarly, a decline in both the number of sentences and the cumulative time handed down may well be blamed on the growing gap between present-day and the days where massive mind-blowing schemes were being discovered nearly daily and brewing public outrage.  

The data is presented below.  Analyses of the 2013 and 2014 data are available here and here, respectively.

(As a disclaimer, this database is meant for educational purposes only, and was compiled through articles published on Ponzitracker as well as through reporting available on the internet through various sources, including Kathy Phelps' monthly Ponzi roundups at ThePonziSchemeBlog.com. A special thanks to Alison Jimenezwith Dynamic Securities Analytics for her assistance in visualizing the data.  Individuals accused of Ponzi schemes are presumed innocent until proven guilty. The database generally only included Ponzi schemes of $1 million or more.  Please feel free to direct any comments or inquiries toinquiries@ponzitracker.com.)