Financial Grooming: A Ponzi Fraudster's Modus Operandi

Following a number of investment fraud cases in the Channel Islands in the last ten years, Barry Faudemer, the Director of Enforcement for the Jersey Financial Services Commission, looks at the modus operandi of a Ponzi fraudster.Several years ago I was sat in a meeting room with a group of ten people brought together by one thing: they had all fallen victim to a Ponzi fraudster. As these victims talked openly about their personal experiences of Ponzi fraud, I was struck by the similarities of each account. They had all been enticed to invest or, as they put it, ‘groomed’ by the same trusted professional.

"For regulators and law enforcement, engaging with victims of Ponzi fraud once they have been skilfully groomed presents unique challenges. Very often the person will be in complete denial that anything is wrong; they believe the fraudster over the authorities and feel irritated that the integrity of their trusted adviser is being questioned."

The Global Enforcement Review (GER) provides analysis and commentary on global enforcement trends in the financial services industry. To compile this report, we studied published data released by the UK Financial Conduct Authority (FCA), the U.S. Securities and Exchange Commission (SEC), the U.S. Commodity Futures Trading Commission (CFTC), the U.S. Financial Industry Regulatory Authority (FINRA), and the Securities and Futures Commission (SFC) of Hong Kong in 2016 and recent years. We have also explored the enforcement trends in various offshore jurisdictions.