Former Merrill Lynch and Raymond James stock broker, Sunil Sharma, plead guilty to wire fraud charges in Federal court last week. According to the U.S. Attorney Office (“USAO”), Mr. Sharma admitted that he stole $6 million from investors by misrepresenting that he was making conservative investments when he actually was pursuing a risky day trading strategy. Apparently, Mr. Sharma was not a successful day trader and eventually his so called conservative investment venture turned into a massive Ponzi scheme.
A “Ponzi scheme,” is an unsustainable fraud pyramid that inevitably ends in ruin. Schemers use money raised from latter investors to pay an earlier investor’s returns. Ponzi schemes invariably fall apart when markets deteriorate or when the schemer is unable to raise more cash. Continue reading →