WHY DOES IT TAKE SO LONG TO

GET OUR MONEY BACK?

One of the most frequent questions I get asked when a Ponzi is raided and shut down by a government agency is this:  Why does it take so long to get our money back from a Ponzi that we invested in?

The simple answer is: They don’t keep financial records.  But it is far more complicated than that, but it is the basic underlying reason.  Let me explain:

When you do business with a legal company, you are used to them maintaining and keeping excellent financial records.  But when you are dealing with operators of a Ponzi, the last thing they want is a financial paper trail; so their records are almost non-existent.   So in your minds eye, you think it will be easy to just refund the money you invested in the Ponzi.  You don’t realize just how wrong you are in your thinking. So when a government agency does raid and shut-down one of these illegal Ponzi schemes, and they are able to freeze cash assets, or tangible goods (Houses, cars, jewelry, boats, airplanes, etc.) the nightmare has just begun in sorting it all out.

What has to happen is for a court-ordered receiver to unravel the mystery behind the Ponzi.  This is no easy task, and I will use the Jeffrey Johnson case as an example to illustrate why.

While not all of these Ponzi operators go to this length to hide, conceal and make it difficult to “follow the money,” they do use as many accounts as they can to thwart any receiver in locating all the stolen money.  Most use up to 10 banks located around the world to hide assets, up to 20 shell companies, and makes the paper trail almost impossible to follow.

As for the Jeffrey Johnson case, here is what the receiver reported to the court he has uncovered so far, and he is still digging:

“This process thus far has included an analysis and review of more than 265 bank accounts and other records from 35 financial institutions and 25 other businesses. In addition to 115 affiliated entities and shell companies of the Receivership Defendants as reported in the Receiver’s first report, the Receiver also discovered at least another 65 entities that were involved in moving funds and concealing the assets of Receivership Defendants.”

The receiver went on to say in his report: “There can be no commercially reasonable explanation for the number of entities and individuals through which funds were routed and re-routed. The only plausible explanation is that these funds are assets of Jeremy Johnson and some of the individuals were paid to shield those assets.” 

Now put yourself in the receiver’s shoes for just a moment.  Can you imagine having to sort through 265 bank accounts, obtaining records from 35 financial institutions, along with 25 other businesses, 115 affiliated entities and shell companies, and 65 entities who aided his Ponzi trying to track where the money went?  Not only do they have to figure out where the money went, but who were all the players aiding in hiding the money and assets in all these companies and shell companies, and other entities.

Now you know why it takes so long for a receiver to do the assigned job by the court in trying to recover as much money as possible for the victims.  It is also why it is so costly for the receiver to do his job.  This process can take months or even years for them to unravel it all, and in many cases, not all can be traced.  It is a financial nightmare.

This is what happens when you get caught up in one of these Ponzi’s.  The sad news is that many times there is no money to be recovered, and you end up losing it all.  Other times you only get pennies back on the dollar, and that is if you are lucky.

As we always tell people, before you invest do your due diligence.  Verify everything first, and then trust.  We trust and then way too late try to verify.  Remember, if it is that good of an investment, it will still be there when you finish your real due diligence.  And by real I don’t mean people on a forum telling you how much they got paid, how honest the admin of the program is, how quickly they got paid, how long the program has been around, and all the other complete bull they feed you.

If you are unsure of how to do real due diligence, we have a link here on our site.  Also be sure to check out our Red Flag Warnings.  Both links will save you a lot of grief, heartache and loss of your money.  If you are still not sure, ASK US, or any other professional you feel you can trust.

If you want to read more about this, go to: www.patrickpretty.com.  He goes into a lot more detail, and will give you how complicated these reverse-engineering of the accounting records really is for a receiver.