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If you suspect that your “investment” was really a Ponzi scheme, you’re usually juggling three things at once: (1) shock, (2) confusion about what’s recoverable, and (3) a creeping fear that it’s already too late. Here’s the good news: Washington law gives defrauded investors multiple paths to recovery, and the feeling that it’s too late is often wrong—especially where the fraud was concealed, the story kept changing, or you were being “managed” into staying quiet. (This is general information about Washington law, not legal advice for your specific situation.) Was I actually defrauded in a Ponzi scheme? What is a Ponzi scheme? Under Washington and federal law, a “Ponzi scheme” describes a specific type of fraud, denoting a situation where earlier investors are paid using money from later investors, not profits from a real, functioning business. In re United Energy Corp., 944 F.2d 589 (9th Cir. 1991). The whole point is to create the appearance of legitimate returns so new money keeps coming in. Common patterns that may appear in the operation of a Ponzi scheme include: “Guaranteed” or unusually consistent returns. A large web of interrelated entities, often sharing similar names, used to obscure the fraud (e.g., “Investor Holdings LLC” moves money to “Investor Holdings 2 LLC,” which is managed by “Investor Holdings, Inc.” which is itself a subsidiary of “Investor Holdings International”). Vague strategy (“proprietary algorithm,” “private lending,” “exclusive deals”) with no real transparency, or a structure that makes transparency impossible (e.g., plans to install devices in locations “throughout the country”—an operation so expansive that no one can meaningfully investigate whether it has been implemented). Debt financing in unsecure industries, such as real estate or cryptocurrency. Pressure to roll proceeds back in (“don’t withdraw now—big opportunity next month”). Delays, excuses, changing paperwork, or sudden new “restrictions”; often includes regular meetings with representatives to assuage investors’ concerns. Aggressive reassurance when you ask basic questions. If you’re seeing some of these signs, don’t wait for certainty before protecting yourself and asserting your rights. What’s my position as a victim, legally? In Washington, the law generally treats Ponzi-scheme victims as people who were induced—through misrepresentations or omissions—to part with money or property. That framing matters because it opens the door to: Securities fraud claims under the Washington Securities Act (chapter 21.20 RCW), including civil liability provisions. Common-law claims that often coincide with Ponzi schemes: fraud, negligent misrepresentation, breach of fiduciary duty, aiding and abetting fraud, conversion, unjust enrichment, civil conspiracy, and negligence theories (including negligent hiring/retention/supervision) depending on the facts and the parties involved. Washington courts have addressed these kinds of theories in investment-fraud contexts. FutureSelect Portfolio Mgmt., Inc. v. Tremont Grp. Holdings, Inc., 175 Wn. App. 840 (2013); Norton v. U.S. Bank Nat'l Ass'n, 179 Wn. App. 450 (2014). Consumer Protection Act (CPA) claims in the right circumstances (especially where the conduct looks like a business practice affecting the public interest), which have their own limitations period. In plain English: the law doesn’t limit you to “I want my money back from the promoter.” Often, the real question is who else participated, enabled it, profited from it, or failed to do what they were supposed to do. Who can I take action against beyond the Ponzi promoter? It is not uncommon for the promoter and other parties in the Ponzi scheme to be insolvent (or headed that way). That is a part of the fraud—perpetrators of a Ponzi scheme will often declare bankruptcy while they store the money they stole in other assets or with other parties. Recovery often depends on identifying other viable defendants—the “ecosystem” around the fraud. Depending on the facts, that can include: Entities that marketed or recommended the investment (advisers, managers, promoters, “referral partners”). Related companies used to hold funds, issue paperwork, or create legitimacy. Gatekeepers (sometimes): auditors, administrators, brokers, or institutions whose conduct crosses the line from “in the background” to actionable negligence or involvement. Washington investment-fraud litigation has included claims aimed at entities alleged to have failed at due diligence or oversight obligations. This is where early factual work matters: the viable case is often the one that identifies where the money went and who touched it. What legal options do I actually have? Most Ponzi-scheme cases aren’t one “magic claim.” They’re a package of claims aimed at (a) recovery, (b) leverage, and (c) preventing asset dissipation. Common options include: 1) Securities fraud claims (Washington Securities Act) Washington’s Securities Act is interpreted broadly to protect investors, and its antifraud provisions and civil liability section are a frequent starting point in these cases. State v. Anthone, 184 Wn. App. 92 (2014) 2) Fraud / negligent misrepresentation These focus on what you were told (and what was left out), and whether you reasonably relied on it. 3) Breach of fiduciary duty If someone truly occupied a fiduciary role (investment adviser relationship, control over funds, discretionary authority, etc.), this can be central. 4) Aiding and abetting / negligent supervision These show up where someone didn’t originate the fraud but helped it run, or failed basic supervision obligations that kept it alive. 5) Unjust enrichment / conversion Useful when tracing money or property and showing the defendant benefited unfairly. 6) Consumer Protection Act (in appropriate cases) A CPA claim can be powerful when the conduct looks like an unfair/deceptive business practice (and not a purely private dispute). The private-action limitations period is four years from accrual. Is it too late to file a claim? What are their statutes of limitations? Often, no. But timing is the part you can’t “undo,” so you treat it seriously from day one. Securities fraud (Washington Securities Act) — what’s the deadline? Washington’s civil liability statute includes a three-year limitations framework that can run from the sale and/or discovery, depending on the specific violation and facts. Fraud and related tort claims — what’s the deadline? Washington has a three-year limitations period for many tort-based claims, including fraud-based claims, under RCW 4.16.080. What does “discovery” mean in real life? “Discovery” is usually not the day you felt uneasy. It’s when you knew—or should have known with reasonable diligence—the essential facts of the fraud. That determination is heavily fact-dependent, and it’s where defendants fight back, arguing that you “should have known” that a fraud was taking place years ago. But this can be countered with evidence that the defendants took steps to ensure that you would be kept in the dark. What if I was being strung along (“lulling”)? Ponzi schemes often include ongoing communications designed to keep victims passive (“returns are coming,” “paperwork delay,” “regulatory issue,” “next quarter,” etc.). Washington case law recognizes “lulling” concepts in fraud contexts: where the defendant’s actions induce “passive inactivity,” limitations can be affected. In some instances, the clock does not begin to run until the fraudulent activities cease altogether. State v. Anthone, 184 Wn. App. 92 (2014) If there’s a criminal case, do I just wait for restitution? You can seek restitution through criminal proceedings—Washington courts can order restitution to victims under RCW 9.94A.753. But restitution has limits. The reality is that, in criminal cases, the state is not representing you—they are representing the public. As such, their priority is not to retrieve your losses, but to penalize unlawful activity. Therefore, any restitution the state receives: May not cover everything. May depend on what assets exist and can be collected. May move slowly. It’s important to note that a civil case isn’t “duplicative” just because a criminal case exists—in fact, the existence of a criminal case can make pursuing a civil case easier and more effective. Often, a smart approach is coordinating around the criminal matter while protecting civil deadlines and positioning for recovery. What should I do right now if I suspect a Ponzi scheme? This is the part people skip because they’re overwhelmed. Don’t. Stop sending money. Gather and preserve evidence (don’t “clean up” your inbox): subscription agreements, promissory notes, pitch decks emails/texts/WhatsApp/Telegram messages account statements, wiring instructions, bank records marketing materials and screenshots of portals Write down a clean timeline (even if imperfect): when you invested, what you were told, when concerns started, what explanations you got. Identify all “touchpoints”: who introduced you, who reassured you, who handled paperwork, where wires went. Talk to counsel early if the amount at stake is meaningful—because early steps can preserve assets and preserve claims. What does a strong Washington Ponzi-scheme case usually focus on? Not outrage. Proof. Leverage. Recovery. A well-built case typically: Defines exactly what was promised vs. what was true. Identifies every potential defendant with a real connection to the fraud. Traces money (or narrows where it must have gone). Moves fast enough to avoid the “empty bag” problem. Treats limitations periods as a first-order issue, not an afterthought. The last thing: don’t self-disqualify Ponzi schemes work because victims are made to feel isolated, embarrassed, or late. That psychology is part of the machine. Washington law gives victims multiple claims, and the deadlines—while real—are not always what people assume at first glance. For clients seeking experienced counsel in securities litigation and related regulatory matters, including dealing with Ponzi schemes, Bender Law, PLLC is here to help. Contact us today at (206) 577-7987 or visit our office at 450 Alaskan Way S Suite 200, Seattle, WA 98104 for a complimentary initial consultation.

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