Ponzi Scheme Victims May Owe Triple Damages For Usury In Clawback Lawsuits – A New Tool In Ponzi Scheme Litigation?

Often, after discovering that they were invested in a Ponzi scheme, victims are left in a state of shock wondering how they became embroiled in such a travesty. Many reflect, concluding in hindsight that the investment was simply ‘too good to be true.’ That shock may later turn to disbelief for those unfortunate enough to have profited from their investment, when a court-appointed receiver or bankruptcy trustee pursues clawback litigation designed to, as the very name suggests, “claw back” any profits received in excess of an investor’s contribution. Logically, those who had invested in a scheme for a considerable period of time faced the prospect of being on the hook for hundreds of thousands, or even millions, of dollars in ‘false profits’, as well as pre-judgment interest. And, in a recent development, if several court-appointed receivers and trustees have their way, some clawback targets may soon be facing the prospect of not only owing their false profits, but triple damages based on violations of state usury laws. More on Forbes here.