Amid growing complaints about Ponzi-type schemes in the wake of the Bernard Madoff scandal, a company in Los Angeles is alleged to have swindled investors out of millions. Special correspondent Jeffrey Kaye reports.
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Bad times and the Madoff case have brought new attention on Ponzi and other get-rich schemes. Here now is another. Special correspondent Jeffrey Kaye reports on a trail of broken promises in Los Angeles.
JEFFREY KAYE, NewsHour Correspondent:
The promises made by a company called Financial Plus Investments were enticing. Spanish-language ads on television and radio, in glossy magazines and newspapers offered fabulous money-making opportunities, paying back up to 100 percent interest.
HOWARD EHRENBERG, Bankruptcy Trustee:
What was going on was essentially a Ponzi scheme amongst largely Spanish-speaking immigrants in East Los Angeles and surrounding areas.
Complaints about Ponzi-type schemes are on the rise. The U.S. Securities and Exchange Commission says the scams are increasing in magnitude.
And in the last six months, the Commodity Futures Trading Commission has filed three times as many Ponzi allegations as in all of fiscal 2007.
In the Los Angeles area, as many as 800 people put some $40 million into Financial Plus Investments between 2006 and 2008. Of the $40 million, according to bankruptcy trustee Howard Ehrenberg, investors are owed $29 million.
As all Ponzi schemes go, the first investors received back some of their money. But as the Ponzi began to unravel, and when it finally collapsed, most of the victims were left un-reimbursed.
Still hoping to recover their investments, many meet regularly to go over records and consult with lawyers.
MARIA ZUNIGA (through translator):
The financing was good, and I thought that with the money I could help my children and make a better life.