Is it right for the court to take $400,070 from an innocent investor for investing $400,000 and making $70 on it?

a tough one but i can see a case for it. if you buy into a mutual fund, all fund participants share in gains and losses (assume a single class of share), i.e. no one person gains or loses more over the other participants. ponzi schemes are of course illegal and the government could make the case that “investors” are always responsible for knowing what they are getting into, and in that respect, “innocent” investors do not exist. it then seems actually fair that all participants should share equally in the gains/losses (all losses in this cases) of the scheme (which was in fact called a fund). just playing devil’s advocate because if it wa me, i’d disclaim all of the above :)

They will take $400+K, throw it in a pot, distribute it among all investors, and the $400+K investor will get back like $300K. All investors will share the same percentage of the overall loss. My initial reaction is this is a fair way to handle this situation.

@avalmez I did not know that this was a mutual fund. With that law that put Martha Stewart in trouble with the law about trading on inside information it seems to be almost impossible that the investors could have all of the information.

@whatthefluther I see nothing fair for a person after an investment in which he makes a 70 dollar profit should be forced to pay 1400 times as much to someone.

@walterallenhaxton…I trust you understand the scheme. It’s like the pyramid scheme where the guy that starts it and the next group of investors make money but then you have dozens of people who lose money. If you buy in near the bottom of a pyramid, the first thing you do is pass your money to the people above you. If you can’t convince anyone to buy in below you, aren’t you going to cry “foul” to everyone to whom you handed your money, be it the initial schemer or the next layer of “investors”, even if they “innocently” bought into it, unaware of the scheme (it would take ignorance not to know…the best one could hope for is to get in early and pray that once you collect, you disappear off the face of the earth to those who handed you their money)? See ya…wtf (my initials)

@whatthefluther Multi level marketing and chain letters come to mind. That still does not make all of the investors equally libel. Only those with intent can be. To be fair it should be tried on an individual investor basis. You do know that the last investor was just as guilty of looking for a deal that was bigger than life.
If the money is still in there I will go along with you but if thy have sold their interset they should not be bothered.

You are one of those investors in a much larger ponzi scheme. Will it be OK when they come and take everything that you have to pay back the other investors in Social Security?

Some things need to be settled without creating new victims. All of the people who invested were subject to loss of their entire investment when they bought it and they knew it.

This is what the entire impossible derivatives thing is. Insuring against loss of investments. Insurance does not work well for that unless the premiums are so high that people say forget insurance. They did that a long time ago when they found out that nobody could do that. We still have those false insurance policies hanging over our heads.

Haven’t you figured it out yet? Our entire financial system is based on such pyramids and it is certain that they are not made of stone.
This kind of stuff it happening in many countries. It will consume that financial system. Taking money from investors will solve nothing. The fraud is the system.

@walterallenhaxton did not mean to write this was a mutual fund, only that it was referred to as a fund.

@walterallenhaxton…I don’t disagree with any of your points. Definitely needs to be tried on an individual basis to determine the athlete’s knowledge of the scheme as well as their level of involvement. The schemer probably used their names and amounts to attract other investors and I wouldn’t be a bit surprised if there are substantial unreported profits and that the athletes were not totally ignorant to the scheme. Everyone wants to make the quick, easy buck and no one seems to want to work to earn it anymore. And a unemployed former athlete will find that letting his name be utilized, be it by a schemer or a legitimate sponsor, will pay large dividends.

@avalmez It does not give enough information. They bought CD’s. Were the initial ones even the high interest ones. I think 70$ is a lousy rate of return for even one day on 400,000$. I also think that 9.6 million dollars will not fix the damage of a 7 billion dollar scheme.
Why did they let the financial advisers off and go after the ball players? Do they think that the ball players know more about finance and the proper rate of return or are they after them because they have money?
There are lots of unanswered questions in this case.

@walterallenhaxton these days any positive return is a big plus. and compared to a total loss, an $70 is outstanding return. again, think of how all participants in a mutual gain/lose equally on a per share basis over an equal period of time.

@avalmez If he had bought 5 tractor trailers and leased them out to truckers he could have gotten that much from each truck every day.