In late 2008, at the onset of the Great Recession, news of Bernie Madoff’s Ponzi scheme exploded into the headlines. Across the nation, people from all professional and economic backgrounds were rushing to liquidate investment funds. Madoff’s clients were no exception. As the market’s decline accelerated, his investors tried to withdraw funds, only to find that his scheme left them bilked.
A Ponzi scheme is type of investment fraud that pays existing clients with funds collected from new investors. Ponzi scheme operators lure investors with the promise of unusually high returns. The Madoff scandal is estimated to have swindled investors of $18 billion. As investors are still struggling to recoup more than a decade later, Pennsylvania investors today can benefit from learning how to protect themselves from similar situations.