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Bernie Madoff. The first word that comes to my mind after hearing that name is trouble. A former stockbroker, he ran into his own troubles in December 2008 when a massive Ponzi scheme he ran collapsed. This collapse signaled the start of an amazing period of time when many schemes would fall, but according to Ponzitracker, have gained momentum once again.
In 2014, the U.S discovered 70 new Ponzi schemes, which involved more than $1.5 billion in investor funds. These crimes translated to about 1,500 years of prison handed out to 136 individuals.
These results have only been part of a greater trend, illustrated in the graph below (created by Dynamic Securities Analytics), which shows that despite the increase in schemes discovered since Madoff, they are not going away.
Since a peak of 113 discoveries in 2009, there has been a steady flow of discoveries, which has produced as many as 100 discoveries (2009) to as few as 67(2013). Here is a look at some of the 2014 statistics and the positive (or negative) trends associated with them:
- The average amount involved in the schemes in 2014 was $21.8M, approximately half of the 2013 average ($43M) and the lowest average since 2011.
- The median Ponzi scheme size went up since 2013.
- The number of schemes and prison schemes increased in 2014 from 2013.
While positive strides have been made and crackdowns have increased, more must be done in order to put a foot down on this crime. Whether we see continued improvement on our end will remain to be seen over time.