Ponzi Schemes Are Still Devastating Victims Years After Bernie Madoff Made Headlines

The old-school investment scam has led to billions in losses, with often charismatic criminals keeping their schemes afloat with lies

Ken Budd,

AARP

Reviewed by

Amy Nofziger

Comments

Published May 14, 2026

people with a white circle covering their faces

Chantal Jahchan (Getty Images, 7)

Key takeaways

Many Ponzi schemes rely on nontraditional or complex investments that are hard to verify, such as cryptocurrency.
Word-of-mouth referrals inside trusted groups make these scams harder to spot and more emotionally difficult for victims to question.
Recovery is sometimes possible after convictions, when courts and regulators distribute seized funds to victims.

As he exited a federal courtroom in March, Christopher Alexander Delgado looked the part of a successful millennial businessman. His well-tailored blue suit matched his stylish blue shoes (no socks); his sunglasses gleamed above an open-neck white dress shirt.

A federal judge in Orlando, Florida, however, had just frozen Delgado’s assets. From January 2023 through January 2026, Delgado — president and CEO of Goliath Ventures, formerly known as Gen-Z Venture Firm — operated a cryptocurrency-based Ponzi scheme, obtaining roughly $328 million from investors, according to a criminal complaint filed by the U.S. Department of Justice (DOJ).

Ponzi schemes have existed for more than a century, and the formula remains the same: Scammers lure investors with promises of big gains. Instead of generating real profits, they use money from new investors to pay earlier ones — while pocketing much of the cash themselves.

Delgado, the DOJ criminal complaint states, used victims’ funds to buy four residential properties worth $14.5 million.

In another Ponzi case, the founder and CEO of a Georgia-based financial advisory group bought a $2 million yacht, among other luxury purchases, according to the DOJ. The CEO pleaded guilty to wire fraud charges this past January. In New York, a businessman pleaded guilty in April to state charges of grand larceny for stealing $50 million from 988 investors in a decades-long Ponzi scheme.

Online frauds such as romance scams may generate more attention, but Ponzi schemes continue to quietly thrive. In 2025, Americans reported $8.6 billion stolen through investment scams, including Ponzi schemes, according to the FBI. People 60 and older reported $3.5 billion in losses to the scams. (The actual numbers are likely far higher because of underreporting.)

Hallmarks of a Ponzi scheme

Ponzi schemes likely originated in the 1870s, though their namesake is Charles Ponzi, who famously stole $15 million from victims in the 1920s. The biggest and most notorious Ponzi scheme was run by Bernie Madoff, whose company’s investors lost roughly $20 billion in the scheme. Madoff was arrested in 2008 and died in prison in 2021 at age 82 while serving a 150-year sentence for the elaborate fraud.

As Madoff showed, Ponzi schemes can be relatively easy to operate and difficult to detect. They collapse only when the scammers can’t find new investors or when existing investors try to withdraw their funds. That’s what doomed Madoff. When the economy crashed in 2008, people wanted to pull out their money, but he couldn’t pay them.

Ponzi schemes share certain other characteristics:

A focus on nontraditional investments: In November 2025, a New Jersey man was convicted on federal charges for a Ponzi scheme in which $44 million was stolen from investors. The investment deals involved COVID-19 masks and test kits, baby formula and first aid kits supposedly destined for Ukraine.

Months earlier, federal prosecutors in New York charged a financier with running a $50 million Ponzi scheme that sold phony investments in precious metals from Colombia and insurance plans related to the federal Affordable Care Act.

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“Even if it’s stocks or real estate, there has to be something unusual about the investment — that’s why they’re able to promise a higher return,” says scam expert Steve Weisman, who runs the website Scamicide.com. “They start with something that sounds legitimate, then they twist it and make it more complicated, and people get caught up with the bells and whistles.”

Unique investments not only sound exotic but people are likely unfamiliar with how they work. That’s why many Ponzi schemes now focus on cryptocurrency.

“There’s a fear of missing out, and greed, and so people jump into investments that they really don’t know anything about,” Weisman says.

Promises of low risks and high returns: Charles Ponzi promised a 50 percent profit on investments in 45 days. In 2008, a Colorado man was sentenced to 330 years in federal prison for a Ponzi scheme that promised return rates of up to 400 percent a month. Madoff’s company didn’t offer unrealistic returns, but losses were nonexistent.

“His returns were always consistent, even when the market was down. That’s a red flag,” says George Young, director of Florida Atlantic University’s School of Accounting.

Recommendations from friends: Unlike online impostor scams, where a stranger gains your trust, Ponzi schemes usually rely on advice from friends, coworkers and family members.

“It’s mainly word of mouth, because Ponzi schemers don’t want their operations to be closely examined,” Young says.

Ponzi schemes often spread through group affiliations, whether it’s race, ethnicity, military service or religion. In 2020, a Pennsylvania accountant was sentenced to 10 years in prison for a Ponzi scheme targeting Amish and Mennonite communities. Affinity groups provide credibility, trust and word-of-mouth opportunities for the scheme, which the scammers exploit.

How to avoid Ponzi schemes

Investors in Ponzi schemes often make some common mistakes. Some ways to protect yourself:

1. Analyze the investment. Ponzi scheme investments are frequently suggested by friends, so the advice seems credible. “People say, ‘My friend is advising this, he’s telling me that he’s made money, so he must have done the homework,’ ” Weisman says.

But people often skip the homework. To learn more about an investment, access the U.S. Securities and Exchange Commission’s EDGAR database. It provides a range of information, including registration statements. The SEC also offers educational materials at Investor.gov.

2. Talk to an expert. Hire an independent adviser to investigate the investment. Check out the Financial Industry Regulatory Authority’s (FINRA) BrokerCheck database: You can see if advisers are licensed and registered. “A lot of Ponzi schemes are operated by unregistered investment advisers,” Young says.

Another option is the SEC’s Investment Adviser Public Discourse database. The SEC primarily regulates larger investment advisers; smaller advisers are usually regulated by state agencies.

3. Watch out for conflicts of interest. With most investments, you have an investment adviser as well as a custodian for the investment itself. With Ponzi schemes, those lines are often “quite blurred,” says Weisman. “The investment adviser is also the custodian — the person holding the investment. That makes it easier for them to falsify records,” he explains.

4. Beware of hype and high-pressure tactics. “Be highly suspicious of any ‘guaranteed’ investment opportunity,” the SEC states. Urgency is also a common feature of scams: The faster you act, the less thoughtful your decision.

5. Avoid the allure of exclusivity. In contrast to the above tactic, some Ponzi schemers provoke investors’ eagerness to invest by seeming selective and even reluctant to accept a potential victim’s money. “Some people would come to Madoff and say, ‘Would you invest my money?’ And he would say, ‘No, I’m not going to do it,’ ” Young says. “He created this aura of exclusivity. It made it even more tempting.”

6. Prepare for deep fakes. Expect Ponzi schemers to create fake AI-generated endorsements from high-profile financiers such as Warren Buffett. As Harvard Business School professor Eugene Soltes said in a recent interview for the school’s Working Knowledge website, “The damage wrought by personalized pitches, especially ones using voice and video, could make Bernie Madoff’s fraud look trivial.”

7. Look for recovery options. Ponzi schemes usually involve actual companies (not anonymous overseas criminals), so you can sometimes recover your money after the scammer is convicted. The DOJ’s Madoff Victim Fund has paid over $4.3 billion from forfeited funds to nearly 41,000 victims, who recovered nearly 94 percent of their losses, the DOJ reports. (The last payment was made in December 2024.)

FINRA offers a six-step plan for victims of investment fraud. Suggested actions include reporting the crime to federal and state securities regulators and law enforcement, as well as your state attorney general’s office.

More resources

Call the AARP Fraud Watch Network Helpline at 877-908-3360 for answers to fraud-related questions and free assistance and support following a scam. The AARP Fraud Watch Network also offers free and confidential virtual support groups for fraud victims.

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The key takeaways were created with the assistance of generative AI. An AARP editor reviewed and refined the content for accuracy and clarity.

Ken Budd has written for National Geographic Traveler, The Atlantic, The Washington Post Magazine and many more. He is the author of a memoir, The Voluntourist.