Report Ponzi FLAG IT

Step-by-step guide

I think I'm in a Ponzi scheme. What do I do?

Work through these steps in order. Most of them take an afternoon. The goal is to protect yourself, keep the evidence intact, and get the information to people with the power to act.

What to do, step by step

  1. Stop putting money in, and stop recruiting

    Don't add funds, don't "roll over" gains, and don't invite anyone else, even if you're offered a bonus or told your account will be frozen if you don't. Anyone you bring in becomes another victim, and promoters who recruited others can face legal claims of their own.

  2. Don't confront the promoter or announce your suspicions

    Warning the people running it can lead them to move money, destroy records, or pressure you. You can keep asking ordinary questions in writing, such as asking for an audited statement or the name of the custodian bank, but save every reply.

  3. Save the evidence before it disappears

    Websites, group chats, and investor portals often vanish when a scheme starts to fail. Capture them now. The evidence checklist and timeline worksheet on the reporting page walk you through what to keep.

    • Account statements, contracts, subscription agreements, and receipts
    • Bank and wire records, checks, and crypto transaction IDs and wallet addresses
    • Emails, texts, and chat messages, exported in full, not just screenshots
    • Promotional material: brochures, slide decks, videos, websites, social posts
    • Names, phone numbers, and roles of everyone involved, including the person who introduced you

  4. Write down your own timeline while you remember it

    Note when you first heard about the investment, every deposit and withdrawal, and every promise made to you. Dates and dollar amounts matter most. Investigators and lawyers will ask for this first.

  5. Work out whether you're a "net winner" or "net loser"

    Add up everything you put in and everything you took out. This number decides how you may be treated if the scheme is shut down. Use the calculator below and read the clawback section carefully before deciding whether to withdraw.

  6. Report it

    File with the regulator that fits the investment. You don't need proof of fraud to report, only facts that worried you. Find where to report →

  7. Talk to a lawyer about your own position

    A securities or investment-fraud lawyer can advise on withdrawals, clawback exposure, and claims. Many offer a free first consultation. If you helped recruit others or were paid commissions, get advice before you do anything else.

  8. Expect a second wave of scams

    Victims of fraud are targeted by "recovery" services that promise to get money back for an upfront fee, sometimes posing as lawyers or government agencies. Real regulators and court-appointed receivers do not charge victims to file a claim.

What not to do

  • Don't delete emails, chats, or apps, or shut down accounts connected to the investment.
  • Don't sign new agreements, releases, nondisclosure agreements, or "conversion" offers into a new fund.
  • Don't pay a fee, tax, or "unlock charge" to get your withdrawal released.
  • Don't move or hide assets you received from the scheme. That can make your situation worse.
  • Don't post accusations naming people online. Share facts with regulators instead.
  • Don't assume you'll be ignored because the amount is small. Small reports often connect to larger cases.

Clawbacks

Why money you withdraw may have to be paid back

When a Ponzi scheme collapses, a court usually appoints a receiver or bankruptcy trustee to collect what's left and divide it among victims. Because a Ponzi scheme's "profits" were really other investors' money, the trustee can sue to recover payments that went out before the collapse. These lawsuits are called clawbacks.

Fictitious profits are the main target. If you took out more than you put in, the amount above your principal is usually recoverable, even if you had no idea it was a fraud. Courts have generally reasoned that it's unfair for some victims to keep other victims' money.

Principal can be at risk too. Investors who acted in good faith can often defend the return of their own principal. Investors who knew or should have known about the fraud, and insiders or promoters paid commissions, may have to return more.

Look-back periods vary. Federal bankruptcy law reaches transfers made in the two years before a bankruptcy filing. State fraudulent-transfer laws, which trustees also use, often reach back four years or longer. In the Madoff case, the court-appointed trustee has recovered more than $15 billion, much of it through lawsuits and settlements with investors and funds that withdrew more than they put in.

Withdrawing now isn't wrong, and it may reduce what you lose. But it doesn't guarantee you keep the money. Get legal advice if a large withdrawal is involved, and keep records of every transfer either way.

Net position calculator

Totals only. Nothing you enter leaves your browser.

Example figures shown. This is a rough guide to how trustees commonly classify investors. Real cases can count fees, transfers between accounts, and reinvested gains differently.

Common questions

Can I get my money back from a Ponzi scheme?

Sometimes, partly, and usually slowly. When regulators shut a scheme down, a court typically appoints a receiver or trustee who gathers the remaining assets, sues to recover money paid out, and runs a claims process. Victims who file claims are paid pro rata from what's recovered. In the Madoff case, the trustee has recovered more than $15 billion and made distributions over more than 15 years. Watch for the court-approved claims website and deadlines, and never pay a "recovery service" to file for you.

Should I withdraw my money right now?

Getting money out may reduce your loss, but a trustee may later sue to recover it, especially any amount above what you put in. If a large sum is involved, talk to a securities lawyer first, and keep records of every transfer either way.

Can I deduct Ponzi scheme losses on my taxes?

Often, yes, as a theft loss. The IRS created a simplified "safe harbor" method for Ponzi scheme victims in Revenue Procedure 2009-20. The rules on timing and amounts are technical, so work with a tax professional before filing.

Is the friend who recruited me responsible?

Many recruiters are victims who believed the pitch. People who were paid commissions or bonuses for bringing in investors, though, can face clawback claims and, in some cases, liability for selling unregistered securities. Report what you know to regulators and let them sort out who knew what.

Sources

Last reviewed October 19, 2026.