(KLAS) — The Federal Bureau of Investigations is looking into an alleged Ponzi scheme involving slip-and-fall lawsuits that operated in Nevada, Utah, and California for the last five years.
In a survey published by the FBI, the agency writes, “Members of this scheme sold ‘settlement contracts,’ ‘lawsuit settlement contracts,’ ‘settlement funding contracts,’ or similar contracts related to third-party slip-and-fall lawsuits” between 2017 to Mar. 2022.
According to the FBI the scheme involved the following characteristics:
- Contracts were often sold in increments of $80,000 or $100,000
- Investors were promised a return of 10-13% in 90 days
- Earlier contracts were four to five pages long and often contained a reference to a slip-and-fall incident, the name of the slip-and-fall victim’s attorney, a settlement monetary award, a non-disclosure agreement, a purchase agreement, and an investor agreement; investors were asked to reinvest their original principal into a new contract after the initial 90 days
- More recent contracts were more than 100 pages and changed to a “membership,” where 90-day renewals were not required
- Salespeople described the contracts as scarce and led buyers to believe they may not be able to immediately invest
- Investors were asked to verbally commit to a purchase between Thursday and Sunday and were required to wire money to the organization the following Monday or Tuesday
- Investors were asked to wire money to a company IOLTA (Interest On Lawyers’ Trust Account)
- Investors were asked to set up an LLC to collect their return
- Investors were introduced to the scheme by persons who shared the same faith, hobbies, gym memberships, etc.
The FBI is asking anyone who thinks they were a victim of this Ponzi scheme to complete the survey to help with the investigation.
Ponzi schemes promise high financial returns or dividends not available through traditional investments, according to the FBI. Instead of investing the funds of victims, however, the con artist pays “dividends” to initial investors using the funds of subsequent investors.
The scheme is named after Charles Ponzi of Boston, Mass. In the early 1900s, Ponzi launched a scheme that guaranteed investors a 50% return on their investment in postal coupons. Although he was able to pay his initial backers, the scheme dissolved when he was unable to pay later investors.