Investors swindled out of $7 billion through a Ponzi scheme operated by Texas tycoon R. Allen Stanford may finally see a return of some of their original investments according to an Associated Press story released Friday, March 15, 2013.
Investors in this Ponzi scheme watched their money go down the drain several years ago when Stanford’s fraudulent operation was exposed. Investors have been hoping for a return of some of the money, and now it looks like their wishes may come true as parties fighting for control of the remaining assets in Stanford’s investment Ponzi scheme have agreed to put differences aside and work together for the good of all.
At stake is about $300 million in frozen foreign bank assets once owned by Stanford. Funds in Canada, the United Kingdom, and Switzerland froze when news broke that Stanford was running a fraudulent operation. Accessing these funds is key to returning at least some of the victims investment money.
"The freeing up of funds ... is a good thing," said Angela Shaw, founder of the Stanford Victims Coalition and one of many generations of her family who lost large sums of money- about $4.5 million- in Stanford’s Ponzi scheme.
Stanford, the man who swindled investors through his Stanford Financial Group companies, used investors’ deposits to fund failed businesses and prop up his high- flying lifestyle. In classic Ponzi scheme style, he continuously looked for new investors to keep his investment company afloat but eventually, the bottom fell out. He was convicted on 13 fraud related counts in 2012 and was sentenced to 110 years in prison.
The agreement between the different parties to work together is certainly a step in the right direction, but even if all of the $300 million is collected and divided among victims, it would still represent only about 4 percent of the $7 billion investors lost to Stanford’s company. Subtract from that the various fees and legal expenses associated with the legal proceedings and the distribution will drop even lower.
Unfortunately, this is often the way things work with Ponzi schemes. What people often forget is that the majority of money invested in a Ponzi operation is already long gone. It has already been used to pay off investors higher in the pyramid, fund ever- riskier investments, cover employee salaries, and pay for the Ponzi scheme operator’s often lavish lifestyle. Once spent, there is no way to get the money back.
When the book is finally closed on Stanford’s investment Ponzi scheme, investors will likely receive back about one percent of the money invested. Vast fortunes and life savings are gone for good and many will have to rebuild their financial lives from scratch. It will be painful for those involved and it serves as a lesson to all to scrutinize their investment options, avoid those that promise big returns, and remain vigilant with invested money at all times.
Want to read more financial articles and find great money saving tips? Visit Money Saving Parent today!
I hope you enjoyed this post! Click the “subscribe” link above or below to receive automatic updates whenever a new post is made.