By erwin Shustak  of Shustak Reynolds & Partners, P.C. posted on Wednesday, October 16, 2013.

Most of us who follow Ponzi schemes, scams and scoundrels remember R. Allen Stanford’s long standing Ponzi scheme. He now resides in a Fed Pen, serving a 110 year sentence for running a 20 year scam which offered high-interest cd’s purportedly on deposit with the Stanford Int’l Bank in Antigua. The only catch was there never were any CD’s. Any money paid to early investors came directly from new pigeons snared in the fraud. Investors left holding the bag sued law firms, insurance brokers and financial service companies saying those intermediaries also bore responsibility for the fraud. The defendants moved to dismiss the class actions, alleging they were barred by the Securities Litigation Uniform Standards Act of 1998. The plaintiffs, in turn, argued that, since the “investments” never actually existed, they were not “covered securities” under that act and their state court class actions should be allowed to continue. The Supreme Court heard lively argument on the first day of its new term. The issue the Court will have to resolve is whether a security that never existed can, in fact, be a “covered security”. Ponzi Schemes are as ubiquitous as they are pernicious. But there seems to be no shortage of takers willing to buy investments that never exsited. If you have been the victim of a Ponzi Scheme, or are being sued in a “claw-back” case, contact us.

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