Most investors lose almost all of their money once a Ponzi scheme collapses, and the trustees appointed to clean up the mess try to find any deep pocket available to recover something. Unfortunately for the trustees, the legal doctrine of “in pari delicto,” Latin for “in equal fault,” may block any recovery. The doctrine is based on the principle that a court will not adjudicate a civil dispute between two wrongdoers when one tries to claim that the other has some responsibility for the losses. When both are culpable, the court lets the losses rest where they fell and dismisses any claims for repayment. Read New York Times report here.
