Investors Lost Billions of Dollars Via Ponzi Schemes

In 2008 about 40 Ponzi schemes failed wiping out investors savings totaling billions of dollars, but 2009 saw a four fold increase in the number of Ponzi schemes that failed, across all 50 states.

The total in dollars was over $16.5 billion according to the Associated Press, and that's not counting the $50 billion ponzi scheme that ruined Bernard Madoff and sent him to prison for 150 years. He was arrested in 2008, so his investment plot total wasn't included in the 2009 totals.

According to all U.S. Attorney's offices, the FBI, and state prosecutors criminal cases as well as civil cases filed by state and federal regulators, more than 150 Ponzi schemes failed.

Enforcement efforts have been ramped up basically because of the Bernie Madoff case, but most of the Ponzi schemes have been discovered due to the financial meltdown in the economy. Some Justice dept officials point out that if the economy had not collapsed most of the plot's would not have been discovered for a much longer period of time.

Ponzi schemes depend on a constant flow of new funds from new investors to pay off older investors. Since the economy shrank dramatically in 2009, new investments also shrank and forced older investors to cash out their investment money. Without new money there isn't enough to pay out all the investors, and a vast majority lose all their money.

Some of these investors lost life savings, and these type of schemes range from a few hundred thousand dollars to the over $7 billion dollar bogus international banking empire of financier Allen Stanford.

Scott Rothstein a disbarred Florida attorney ran a $1.2 billion scheme, and both he and financier Allen Stanford have pleaded not guilty.

63 year old retired Air Force Sergeant Tom Annis tried to do some research on Patrick Kiley after hearing of his investment program on a weekly Christian radio show called "Follow the Money. Annis figured since there were no lawsuits or complaints on the Internet about Kiley it was safe to invest in his financial program.

Annis of Jacksonville, Florida invested his nest egg of $270,000 and lost all of it after federal regulators shut down the $190 million fraudulent scheme.

Ponzi schemes are named after the infamous Charles Ponzi, an Italian immigrant who invented a bogus investment scheme involving postal currencies in 1919. He eventually went to prison after cheating thousands of investors of more than $10 million, before being deported back to Italy in 1934.