Los Angeles Clawback Defense Lawyer

The 2009 conviction of Bernard Madoff on federal securities fraud charges served as a wake-up call to the securities industry. It underscored the dangers Ponzi schemes hold for private and business investors and securities professionals.

When Ponzi schemes are discovered, they disintegrate. Investors who fall victim to such schemes may pursue compensation from the brokers, brokerages or other entities that perpetrated or participated in the fraud against them. They may also seek compensation, via the claims of a court-appointed receiver, from the early investors ("early Ponzi winners") who either knowingly or unknowingly benefited from their early involvement.

Such claims by federal equity receivers or bankruptcy trustees are called "clawback" actions.

I am Jonathan Schwartz, a veteran securities attorney working in Marina del Rey, California. In my more than 30 years as an independent securities attorney, I have often defended early Ponzi winners against clawback claims.

During my extensive career, I have tried or arbitrated civil securities cases as an independent attorney. In my years in the practice of securities law, I have served as a trial attorney for the U.S. Securities and Exchange Commission (SEC), an attorney advisor to Commissioner Philip Elman of the U.S. Federal Trade Commission (FTC), and as a compliance attorney for the Office of Foreign Direct Investment (OFDI) — an Office within the U.S. Department of Commerce created by Executive Order of the President of the United States.

Let my insider's understanding of securities law work for you. For more information, contact me online at The Law Office of Jonathan Schwartz or call 310-496-5770.

Determining whether the money you received is safe from a clawback action can be difficult. If SEC officials do not believe there is enough money available to support a receivership and to pay back Ponzi investors, they may not appoint a federal receiver.

However, in cases where there is sufficient money to collect, the SEC will ask that the court will appoint a receiver to create a fund for repaying investors. The receiver is the only person who can bring these lawsuits, which may be filed against:

  • Early Ponzi investors who may be asked to pay back the money they received
  • Companies and individuals who received money from the Ponzi schemers as gifts — even charities
  • Sales people who received commissions from the Ponzi scheme and had knowledge or should have known of the Ponzi scheme
  • Investors who withdrew their money before the scheme collapsed
  • Banks that provided services to the Ponzi scheme and had knowledge or should have known of the illegal activity
  • A variety of other persons or entities who may have benefited from the Ponzi scheme, depending on the particular facts of the case

The early Ponzi winners are among the most vulnerable defendants because they received money from the scheme as alleged returns on investment. Later investors often receive nothing and are usually considered tort creditors.

How Can A Ponzi Scheme Defense Lawyer Help Me?

I have extensive experience negotiating with federal equity receivers or bankruptcy trustees and with the SEC. I am familiar with both federal securities laws and state fraudulent transfer statutes, and I can use this knowledge to your advantage.

Depending on your circumstances, I may be able to defend you by:

  • Proving that you provided a reasonably equivalent benefit for the money you received
  • Requesting a reduction of the amount of money owed (for instance, if the received funds were spent prior to the action)
  • Demonstrating certain sums should remain with the investor and not be surrendered to the receivership (such as collateral from a collateralized loan)
  • Determining if the receiver truly intends to sue. (If the receiver represents a large number of investors who made a large profit as a group but not individually, the receiver may not be able to join them all in an action. There are also some cases (though it can be hard to tell which ones) where the receiver will write letters demanding "clawback" payments and then not file lawsuits against those who decline to pay)

Experienced Representation | Free Phone Consultation | Attorney Jonathan Schwartz

For a free telephone consultation with an experienced securities lawyer, contact me online at The Law Office of Jonathan Schwartz or call me at 310-496-5770.