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3 Stetson Bus. L. Rev. 1 (2024)
Restitutinary Remedies in the Context of Ponzi Schemes: A Commonwealth Perspective

handle is hein.journals/setnbisr3 and id is 7 raw text is: RESTITUTIONARY REMEDIES IN THE CONTEXT OF PONZI SCHEMES: A COMMONWEALTH PERSPECTIVE By John D. McCamusl* TABLE OF CONTENTS I. In trodu ction ........................................................................... 1 II. Claims by Losers Against Net Winners................................. 3 A. The Direct In Personam Claim........................................ 3 B . Proprietary R elief ............................................................ 9 III. Claims by Swindlers Against Net Winners........................ 14 IV. Claims By Losers Against Swindlers.................................. 25 V. Is an Ideal Solution Possible at Common Law..................... 27 V I. C on clu sion ............................................................................ 33 I. INTRODUCTION The basic nature of a Ponzi scheme is widely known and understood. The operator of a Ponzi scheme invites investments on the promise of unusually high rewards of some kind, whether in the form of interest, dividends, profits, or returns in some other form.2 The scheme is fraudulent in the sense that the high rewards are said to be generated by a business or scheme which either may not exist or is most unlikely to generate resources able to financially support such rewards to investors.3 In fact, the rewards are paid by the Ponzi operator with assets invested by subsequent investors.4 In due course, when the supply of further investors runs dry, the scheme collapses.5 A complex set of legal issues arises as the various participants in or victims of the scheme attempt to sort 1. * FRSC, University Professor and Professor of Law Emeritus, Osgoode Hall Law School, York University; Davies Ward Phillips Vineberg LLP. 2. U.S. Sec. and Exch. Comm'n, Ponzi Scheme, INVESTOR.GOV, https://www.investor.gov/protect-your-investments/fraud/types-fraud/ponzi-scheme (last visited Dec. 19, 2023). 3. Id. 4. Id. 5. Id.

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