Ponzi Schemes Poised To Topple In Bear Market

Law360, New York (December 12, 2008, 12:00 AM EST) -- The Ponzi scheme underlying famed trader Bernard L. Madoff's investment firm was revealed after clients, squeamish in a bear market, tried to redeem billions in investments. As confidence in financial markets wanes and investors rush to pull deposits, more Ponzi schemes are sure to unravel and their masterminds will face tough treatment from federal prosecutors, securities experts agree.

Ponzi schemes, whereby old investors are paid with money from new sources, are ripe for exposure in a bear market, when funds freeze up, securities attorneys told Securities...
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