Ponzi Scheme Discoveries Skyrocketed In 2022, With One In Four Schemes Involving Crypto

(As a disclaimer, these statistics are presented for educational purposes only, have not been independently verified, and were primarily compiled through articles on Ponzitracker and internet reporting by various sources including Kathy Phelps' monthly Ponzi roundups at ThePonziSchemeBlog.com. Individuals accused of Ponzi schemes are presumed innocent until proven guilty. These statistics generally only included Ponzi schemes of $1 million or more based in or with a substantial nexus to the United States. Please direct any comments or inquiries to inquiries@ponzitracker.com.)

The number of uncovered Ponzi schemes surged in 2022 as the world attempted to find a new sense of normalcy as the COVID-19 pandemic waned, marking a significant shift from 2021 in which the lowest number of Ponzi schemes were discovered since 2008. In addition to the significant rise in new Ponzi schemes which collectively involved over $5.3 billion of potential losses, the data also ominously shows that more than one in four of the new schemes were related to cryptocurrency. The criminal justice system appears to have also returned to normalcy, as the total number and cumulative length of prison sentences for convicted Ponzi schemers hit a five-year high in 2022.

2022 Ponzi Scheme Discoveries and Sentences

2019 was a banner enforcement year for regulators that marked the reversal of a multi-year trend of declining Ponzi schemes, as at least 60 Ponzi schemes were uncovered that collectively involved more than $3 billion in investor funds. This momentum came to a screeching halt in March 2020 with COVID-19 and the lull carried into 2021, as the 34 schemes uncovered in 2021 marked a nearly 50% drop since just 2019 and was also the lowest number of schemes charged since 2008 - a time when Bernard Madoff was a respected Wall Street name. In addition to paralyzing or delaying regulatory investigations, the pandemic’s new normal also took its toll on sentences handed down to Ponzi schemers given the inability (at least initially) to schedule in-person sentencings. Just 22 sentences were handed down in 2020, with that number rising to 45 in 2021.

In total, 57 schemes were uncovered in 2022, meaning that a new scheme was uncovered about once every six days. This represented a nearly 70% jump from the 34 schemes discovered in 2021. Collectively, the 57 schemes represented an astounding $5.3 billion in investor funds - believed to be the highest number in the records kept by Ponzitracker in at least a decade. Indeed, the $5.3 billion in investor funds is over 500% higher than the $1 billion of investor funds caught up in 2020 Ponzi schemes. This was due to eight schemes involving at least $100 million in alleged losses - of which five of those schemes promised outsized returns linked to cryptocurrencies. Given the number of large schemes, the average scheme size was $94.1 million and the median size was $8.5 million. Roughly 40% of the 106 accused defendants called either Florida, Texas, New York, or California home, but 2022 also saw North Carolina have the third-highest number of citizens accused of a Ponzi scheme. One statistic that has remained remarkably consistent over the years? Men continued to make up nearly 90% of the accused Ponzi schemers.

The number of sentences handed down to convicted Ponzi schemers also continued to rise, with 54 sentences doled out in 2022 which marked a 20% increase from the 45 sentences in 2021. These 54 sentences collectively represented nearly 600 years in prison, with the average sentence coming out to just over 131 months. The longest sentence was handed down to Texas resident James Nix, who received a 48-year sentence for carrying out a $6 million Ponzi scheme.

Cryptocurrency - A Trend?

One interesting takeaway from the data was that over 25% of the uncovered Ponzi schemes had a significant nexus to cryptocurrencies, many of which touted purported high returns from digital asset trading. Perhaps unsurprisingly, these schemes were more likely to have a worldwide reach and accordingly involved significant sums of money. Indeed, despite comprising approximately 25% of the discovered schemes in 2022, the total investor funds at risk in those crypto-related schemes was nearly $3 billion - over half of the total $5 billion for the 57 schemes busted in 2022. Given the swoon in cryptocurrency prices that began in mid-2022 as well as the continuing regulatory scrutiny, it may not be surprising to see this trend continue into 2023.

The database of alleged Ponzi scheme discoveries is below:

The database of Ponzi scheme sentences is below: