@JS1022
Ponzi scheme was Aequitas. Started as buying defaulted hospital debt for collection. Then expanded into loaning $ for fly by night private university (Corinthian) and other questionable $ making schemes.
- SEC filed a lawsuit. Their lawsuit wording said "Ponzi-like" and that provided the ammo for tax payers to follow IRS Ponzi deductions. Here is the actual filing with "Ponzi-like" wording. Aequitas Management, LLC, et al. (Release No. LR-23485; March 11, 2016) (sec.gov)
- Auditor Deloitte was sued by big firm class action lawyers
- Smaller investment advisors sued by investors group represented by small firm lawyers
- No criminal actions ever taken against the company principles or anyone
So clearly criminal action was not necessary. But SEC with past Ponzi experience knew the need to say "Ponzi" for investors to do their taxes. BTW, IRS safe harbor procedures all came out of Madoff aftermath. I guess rich Madoff clients needed a clear tax deduction process 🙂
I'd imagine if the total $ lost is smaller (say $10M by few investors) then a fed agency like SEC will not get involved and defining "Ponzi" is trickier. If no gov agency says "Ponzi" then you are left with IRS Ponzi procedure definition. Are there other ways? Maybe seeking out CPAs who can gather precedence of similar case and monetary scale might be one way to decide. Of course then need to rely on CPA's aggressive or conservative interpretation of vague or incomplete rules. But they can also contact IRS for clarification. I know one investor's small scale CPA did just that.
Another note is if the collective $ lost is big, a lot of lawyers will show up. Big class actions are taken by the big firms. But smaller lawyers will show up with seemingly helpful info (like website since they know investors will search and/or get interviewed by the media) to collect as many investors as possible for them to represent and be involved. Just beware, they are trying to gather a group and you need to determine which groups has what value to you.
