One Among Hundreds of Ponzi Schemes on Record
“Seaman allegedly made Ponzi-like payments to investors because he did not generate profits in connection with his trading sufficient to pay investors their required monthly distributions,” the SEC said.
So in order to stay afloat with failing investments, Seaman used new investments to pay off previous investors. Eventually, this vicious and dangerous cycle caught up with him.
Unfortunately, this familiar Ponzi scheme story has played out in various forms since the turn of the 20th century. Charles Ponzi—an Italian swindler—conned people out of $20 million back in 1920. By overpromising fictitious and fraudulent returns on investment, Ponzi led many people to give him their life savings. After being found out, he was charged and convicted of 86 counts of mail fraud and served three and a half years of his life sentence in prison. Since that time, others—most notably Bernie Madoff—have followed in Ponzi’s footsteps.
As stated in the press release, the SEC “encourages investors to check the backgrounds of people selling investments by using the SEC’s Investor.gov to identify quickly whether they are registered professionals and confirm their identity.”
