Don’t Let a Ponzi Scheme Sink Your New York Business

Ponzi schemes don’t just target individual investors. Businesses across New York—from small startups to established companies—can also get pulled into these scams. And when they do, the financial damage can be staggering. One bad investment, one dishonest pitch, and suddenly you’re scrambling to save your cash flow, reputation, and future.

If your business is caught in this kind of mess, don’t wait to take action. With the help of our experienced commercial litigation attorneys, you can hold bad actors accountable and protect your company’s future. At Horn Wright, LLP, we know the signs of fraud and how to respond fast. 

Spot the Scam Before It Drains You

Ponzi schemes don’t start with alarms and sirens. They usually begin with charm, promises, and "can’t-miss" returns. But behind that friendly pitch is a structure built to collapse.

Red Flags That Signal Fraud

If you're seeing any of these signs, it's time to step back and look harder:

• Consistently high returns with little or no risk: Real investments come with ups and downs. A "guaranteed 20% return" should set off alarms.
• Unclear business model: If no one can clearly explain how the company makes money, it's a red flag.
• Pressure to reinvest: Fraudsters often push victims to roll over earnings instead of cashing out.
• Delays in withdrawals: If it takes longer and longer to access your funds, there's a problem brewing.

Promises That Sound Too Good to Be True

Ponzi schemes thrive on emotional appeal. The scammers sound confident. They use buzzwords. They drop names and show off success stories. But here's the thing: they don’t want you to look too closely.

Here’s what they often say:

• "We’ve never had a down quarter."
• "You don’t want to miss this window."
• "Everyone in your industry is jumping in."

In New York, schemes like these fall under fraud and securities violations. N.Y. Gen. Bus. Law §352 empowers the state attorney general to investigate and prosecute investment fraud. Don’t brush off the warning signs.

Hit Back Fast if You’ve Been Scammed

Discovering you've been defrauded is devastating. But now isn’t the time to freeze. The faster you act, the more you can preserve—and the stronger your case becomes.

Preserving Evidence and Financial Records

First, lock down your records. You’ll need a clear paper trail to trace where your money went.

Steps to take immediately:

• Download all financial statements: Bank records, wire transfers, and correspondence with the scammer.
• Save emails and texts that include promises, deadlines, or investment descriptions.
• Print out pitch decks or brochures used during the scheme.
• Keep a timeline of your interactions, payments, and concerns.

A clean set of records helps commercial litigation attorneys dig deeper and build your legal strategy.

Notifying the Proper Authorities

If you suspect a Ponzi scheme, it’s not just a private issue. It could be part of a broader criminal investigation.

Notify the following:

• New York State Attorney General's Investor Protection Bureau: They investigate securities fraud under GBL §352.
• New York State Department of Financial Services (DFS): They can step in if financial institutions were involved.
• Local law enforcement: Especially if other local businesses were targeted.

Your report could be the one that stops the scam from growing.

Fight for What You Lost in Court

The damage may be done, but that doesn’t mean you have to eat the loss. You can take action against the person or company behind the scheme.

Civil Lawsuits Against Perpetrators

If the person who scammed your business still has assets, you can go after them in civil court. That includes suing for:

• Actual losses: Money paid into the scheme.
• Consequential damages: Financial harm your business suffered as a result (like missed contracts or layoffs).
• Punitive damages: If the fraud was intentional and outrageous.

New York courts take financial fraud seriously. With the right team of commercial litigation attorneys, you can build a case and work toward recovery.

Working with Law Enforcement

If criminal charges are filed, that can actually help your civil case. A conviction can support your claims in court.

How it works:

• Restitution orders: Judges may order the defendant to pay back victims.
• Seized assets: Law enforcement might recover funds, which can later be distributed to defrauded businesses.
• Federal support: The FBI and SEC often assist when schemes cross state lines or involve large sums.

You won’t be alone in the fight. But coordination between civil and criminal cases is key—something your legal team should manage carefully.

Smart Money Moves: How New York Businesses Can Stay Safe

Once you’ve seen the underbelly of investment fraud, you won’t look at "opportunities" the same way again. That’s a good thing. Smart skepticism protects your business.

Vetting Investment Opportunities

Before handing over any money, get the full picture.

Tips that help:

• Run a background check on the company and individuals involved.
• Search for regulatory records: Use FINRA's BrokerCheck and the SEC's investment adviser database.
• Review past performance: Ask for verified, audited financials. If they won’t share them, walk away.

Even in fast-moving industries, due diligence isn’t optional. It’s smart business.

Asking the Right Questions

Don’t be afraid to push for clarity. The right questions reveal a lot about the offer—and the person making it.

Questions to ask:

• "How exactly does your investment model work?"
• "Who holds the funds, and where are they kept?"
• "Can you explain the risks?"
• "Are you registered with any financial oversight agency in New York or nationally?"

If the answers are vague or dodged, that’s your cue to step back.

Get Help from Commercial Litigation Attorneys in New York

Being pulled into a Ponzi scheme is more than frustrating—it’s personal, and it can wreck everything you've worked for. The commercial litigation attorneys at Horn Wright, LLP, fight for businesses across New York who’ve been scammed, misled, or financially ambushed. When your future is on the line, let us go after the fraudsters for you. We're proud to be one of the best law firms in America because we lead with strategy, urgency, and grit.