by Brian Mahany
There are no easy answers to most questions in Ponzi scheme cases. Often the money is simply gone. Finding hidden offshore money is hard enough – if there is even money to be found. Often victims are left wondering, “Will the government help me get my money back?” Unfortunately, the answer is often “No.”
The job of prosecutors is to put offenders in jail and make sure they don’t hurt anyone else. Often they will seek a restitution order but most of those orders are never truly enforced. Yes, if someone commits criminal mischief and keys your car, the court might enforce a $500 restitution order. How do you make someone pay back $50 million, however.
Remember, when the offender gets out of jail he or she will have zero job prospects and probably dozens of other suits and claims.
Courts will sometimes appoint a receiver to collect money on behalf of victims. This is frequently the case in SEC cases. The quality of work varies greatly depending on the receiver. Some are aggressive and others simply pursue the low hanging fruit. Because most receivers get paid on an hourly rate, many “milk the system” and collect far more than the victims.
Receivers generally work on behalf of all creditors. The good news is that you don’t have to pay for their services, the bad news is that anything they collect goes first to their fees. if anything is left it is split among all victims.
This morning I read the 10th and final liquidation order in the SEGOES case pending before the Grand Court of the Cayman Islands. SEGOES was a stockbrokerage firm that defrauded investors out of millions – $9.8 million to be exact.
The case began in 2005. Seven years later the court appointed liquidators (receivers) reported they collected approximately $4 million. Forty cents on the dollar is pretty good, right? Wrong. Almost all of that money is being taken by the receivers for their expenses. There is but $112,000 available for distribution. That amounts to just 1 penny on the dollar. Factor in the time value of money and the victims get nothing.
The purpose of this article isn’t to always advocate for private attorneys. If there is already a receiver in the case we will often decline the work unless we can determine a source of assets not being pursued by the receiver.
Generally, the first creditors (victims) to take action have the best chance of getting paid. Assuming no receiver has been appointed, those folks don’t have to share their money with others, either.
We are often able to take cases on a hybrid or contingent fee basis meaning that we only take a percentage of what we collect. We are not saying that the liquidators in SEGOES don’t deserve every penny of what they charged. Working on a contingent fee basis keeps one hungry and therefore focussed.
If you are the victim of some type of investment fraud, consider your choice of attorney carefully. Getting a judgment is relatively easy. Collecting is anything but.
The fraud recovery lawyers at Mahany & Ertl have helped many people get back their hard earned money. We are proud members of the International Association for Asset Recovery and have helped people around the world. Wherever the money goes, we can help you get it back.
For more information, contact attorney Brian Mahany at (414) 704-6731 (direct) or by email at All inquiries are confidential.
Mahany & Ertl – Giving Victims A Voice. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine & Minneapolis, Minnesota. Services available in other locations.