Kathy Bazoian Phelps
Senior Counsel in Ponzi Scheme Litigation
and Bankruptcy Matters

Kathy is a senior business trial attorney with more than 30 years experience prosecuting and defending claims for high net worth clients involved in Ponzi scheme matters and in bankruptcy proceedings. Kathy’s practice includes recovering assets for clients in complex fraud cases under standard fee and alternative fee arrangements. She also handles SEC and CFTC whistleblower claims. Kathy also serves as a mediator in bankruptcy matters, in complex business disputes, and in matters requiring detailed knowledge about fraud or Ponzi schemes.

Kathy’s Clients in Ponzi Scheme Cases and Bankruptcy Matters
Equity Receivers
Bankruptcy Trustees
High Net Worth Investors
Debtors in Bankruptcy
Secured and Unsecured Creditors

Friday, January 3, 2014

Announcing The Ponzi Scheme Blog’s JANUARY POLL

Posted by Kathy Bazoian Phelps
Cast your vote in this month’s poll. This one relates to how the government should assess fines against financial institutions that have participated in, failed to report suspicious activity in, or taken other action to assist in perpetuating a Ponzi scheme.
Specifically, the question is:
How should the dollar amount of fines for a bank's participation in a Ponzi scheme be determined?
For background purposes, let me recap the two largest such fines in the past few months levied in two of the more notorious Ponzi schemes:
  • JPMorgan tentatively agreed to pay $2 billion for involvement in Bernard Madoff scheme (total customer losses in Madoff are about $19.5 billion) 
  • TD Bank was assessed fines of $52.5 million for involvement in Scott Rothstein scheme (total victim losses in Rothstein are at least $500 million in the $1.4 billion scheme)
To get a flavor for the number of fines and the dollar amount of those fines assessed against financial institutions in all kinds of cases, see FinCEN’s report of fines in enforcement actions in all cases at http://www.fincen.gov/news_room/ea/, or the Office of the Controller of Currency website summarizing enforcement actions and fine amounts at http://apps.occ.gov/EnforcementActions/.

Here are the choices in the JANUARY POLL, but please feel free to post comments or email me any other ideas you have on how to calculate the dollar amount of the fines being assessed. Should those fines be:
     a. A percentage of the bank's profits from the scheme?
     b. A percentage of the bank’s annual net profits?
     c. An amount sufficient to pay all victim losses?
     d. Other?


  1. d. A contribution sufficient to make victims whole taking into consideration all other recoveries from other defendants plus the costs of recoveries, including the fees and costs of the trustee, legal counsel, and other professionals retained to assist in those recoveries.

  2. I assume that the percentage in option a can exceed 100.