Victims’ Rights & Ponzi Scheme Victims

Mandatory Victims’ Restitution Act · Crime Victims’ Rights Act

Under the Mandatory Victims’ Restitution Act, the victims of federal crimes have a right to restitution for their losses. Under the Crime Victims’ Rights Act (18 U.S.C. § 3771) and Rule 60 of the Federal Rules of Criminal Procedure, victims have a number of important procedural rights, including the rights to be informed about and attend criminal proceedings and to be heard at any public proceeding concerning release, plea or sentencing.

Ponzi Scheme Victims

In a Ponzi scheme, the funds of new investors are used to pay the promised returns to earlier investors. All investors who are not in on the scheme are victims of fraud, but different investors may be in very different financial positions at the time the scheme unravels.

At that point, there are a number of things that may occur affecting the rights of the victims:

  • Some investors may assert constructive trusts in the funds they have contributed.
  • The government may seek restitution on behalf of the victims or determine that it is impractical to do so.
  • The government may pursue civil or criminal forfeiture of the perpetrator’s assets.
  • A bankruptcy trustee or court-appointed receiver may attempt to “claw back” some investors’ gains (as in the Bernie Madoff case).

Once a Ponzi scheme has been exposed, there are generally limited funds available to compensate the victims of the fraud for their losses. Victims who do not take legal action to protect their rights may find themselves deprived of their fair shares.

The rights and interests of various parties may come into conflict, making it particularly important for the victims to obtain representation from experienced counsel.

Advising Victims on Their Legal Rights and Options

For anyone who has been the victim of a financial crime such as a Ponzi scheme or suffered any other property loss as a result of a federal crime, one important issue to consider is whether to pursue compensation through restitution or other remedies. Restitution is generally a less expensive and quicker remedy than a lawsuit. The government also has collection remedies that are not available to private parties.

Our attorneys have the experience to advise crime victims on the best options for achieving their individual goals and to represent the interests of those who choose to pursue restitution. In addition, we help clients assert their full range of rights under the Crime Victims’ Rights Act.

Mr. Smith is currently representing Bariven, S.A., a subsidiary of the Venezuelan state oil company PDVSA, in a criminal case in Houston, where Bariven is the victim of the defendants’ bribery, FCPA and money laundering offenses. The United States refuses to recognize Bariven, S.A. as the victim, arguing that the company does not “deserve” victim status because it is allegedly too corrupted. Bariven is seeking about $600 million in restitution from the defendants. United States v. Roberto Enrique Rincon Fernandez, No. 15-CR-654 (S.D. Tex.).

Our firm is nationally recognized for our work in the areas of forfeiture and restitution, putting our lawyers in a strong position to advise and represent crime victims. Contact us or request a consultation today to discuss your case with our firm’s experienced lawyers.