BEWARE… you can get into serious trouble with the law if you knowingly participate in any of those “get rich fast” investor schemes floating around, particularly on social media.
You face fines up to $5 million and imprisonment for up to five years on summary conviction in the Magistrates or District Courts. I’m talking about the recent and welcome criminalisation of Ponzi or pyramid schemes brought about by an amendment of the Securities Act, Chapter 83:03 via the Finance Act (No. 2) Act, 2021 (hereinafter called “the Amendment Act”) – available online.
Named after Charles Ponzi who swindled US investors of millions of dollars back in the 1920s, Wikipedia does a good job at describing this type of fraud: a Ponzi scheme “lures investors and pays profits to earlier investors with funds from more recent investors. The scheme leads victims to believe that profits are coming from legitimate business activity (e.g., product sales or successful investments), and they remain unaware that other investors are the source of funds. A Ponzi scheme can maintain the illusion of a sustainable business as long as new investors contribute new funds, and as long as most of the investors do not demand full repayment and still believe in the non-existent assets they are purported to own.”
In recent times, such a scheme usually presents itself in the form of social media posts boasting about how the author invested money and gained high returns in a short space of time (with almost no details on where the profits came from) followed by an invitation to contact them to find out how you can invest and profit as well.
Section 13(b) of the Amendment Act sets out several definitions of what constitutes a prohibited scheme, including this one: “an investment scheme provides an investor with returns derived substantially from investments made by other investors in the scheme, rather than from genuine profits…”
The Amendment Acts also makes it illegal to establish or operate a “prohibited scheme”. This attracts the largest punishment on summary conviction of a fine up to $10 million and up to ten years in prison.
Knowingly advertising or inviting a person into a “prohibited scheme” is also now a criminal offence, where you can be fined up to $2 million and imprisoned up to 3 years.
Each of these three sets of offences can carry an administrative fine of up to $5 million.
A glaring missing element of the legislation though is a direct remedy for the innocently swindled.
I saw no provision for compensation to be paid or reimbursement of monies to be made to any victims who unknowingly lost their “investments”.
Examples of such could have been, for example, a compensation fund set up by the State to give the victims partial or full payments based on the amounts they were defrauded. Or provisions in the Amendment Act specifically giving the Court the power to order the guilty party to refund the victims. The victims may be left to their own devices, such as suing the fraudsters in a civil lawsuit, to get their monies back.
For your own protection, it is always a good idea to check with a trusted and experienced Attorney at Law for advice before participating in any type of investment scheme. Be safe Trinidad and Tobago!
Disclaimer:The contents of this article are for general informational purposes only and/or contain the opinions and/or thoughts of the writer only. It does not provide legal advice and does not create an attorney-client relationship with any reader. For legal advice on your specific situation, please contact an Attorney-at-Law of your choosing directly. Liability for any loss or damage of any kind whatsoever allegedly incurred as a consequence of relying on content in this article is thus hereby excluded to the fullest extent permitted by law.
You Can Be Jailed for Joining Ponzi Schemes
BEWARE… you can get into serious trouble with the law if you knowingly participate in any of those “get rich fast” investor schemes floating around, particularly on social media.
You face fines up to $5 million and imprisonment for up to five years on summary conviction in the Magistrates or District Courts. I’m talking about the recent and welcome criminalisation of Ponzi or pyramid schemes brought about by an amendment of the Securities Act, Chapter 83:03 via the Finance Act (No. 2) Act, 2021 (hereinafter called “the Amendment Act”) – available online.
Named after Charles Ponzi who swindled US investors of millions of dollars back in the 1920s, Wikipedia does a good job at describing this type of fraud: a Ponzi scheme “lures investors and pays profits to earlier investors with funds from more recent investors. The scheme leads victims to believe that profits are coming from legitimate business activity (e.g., product sales or successful investments), and they remain unaware that other investors are the source of funds. A Ponzi scheme can maintain the illusion of a sustainable business as long as new investors contribute new funds, and as long as most of the investors do not demand full repayment and still believe in the non-existent assets they are purported to own.”
In recent times, such a scheme usually presents itself in the form of social media posts boasting about how the author invested money and gained high returns in a short space of time (with almost no details on where the profits came from) followed by an invitation to contact them to find out how you can invest and profit as well.
Section 13(b) of the Amendment Act sets out several definitions of what constitutes a prohibited scheme, including this one: “an investment scheme provides an investor with returns derived substantially from investments made by other investors in the scheme, rather than from genuine profits…”
The Amendment Acts also makes it illegal to establish or operate a “prohibited scheme”. This attracts the largest punishment on summary conviction of a fine up to $10 million and up to ten years in prison.
Knowingly advertising or inviting a person into a “prohibited scheme” is also now a criminal offence, where you can be fined up to $2 million and imprisoned up to 3 years.
Each of these three sets of offences can carry an administrative fine of up to $5 million.
A glaring missing element of the legislation though is a direct remedy for the innocently swindled.
I saw no provision for compensation to be paid or reimbursement of monies to be made to any victims who unknowingly lost their “investments”.
Examples of such could have been, for example, a compensation fund set up by the State to give the victims partial or full payments based on the amounts they were defrauded. Or provisions in the Amendment Act specifically giving the Court the power to order the guilty party to refund the victims. The victims may be left to their own devices, such as suing the fraudsters in a civil lawsuit, to get their monies back.
For your own protection, it is always a good idea to check with a trusted and experienced Attorney at Law for advice before participating in any type of investment scheme. Be safe Trinidad and Tobago!
Copyright © 2022 Neela Ramsundar, LL.B (HONS), L.E.C is a Civil Litigation Attorney at Law & Certified Mediator.
Disclaimer: The contents of this article are for general informational purposes only and/or contain the opinions and/or thoughts of the writer only. It does not provide legal advice and does not create an attorney-client relationship with any reader. For legal advice on your specific situation, please contact an Attorney-at-Law of your choosing directly. Liability for any loss or damage of any kind whatsoever allegedly incurred as a consequence of relying on content in this article is thus hereby excluded to the fullest extent permitted by law.