A Colorado man has been sentenced to 32 years in prison and ordered to pay more than $5 million in restitution for his role in a multi-state Ponzi scheme.
The Statewide Grand Jury indicted 31-year-old sentenced Jason T. Brooks in June 2009 on suspicion that he accepted more than $10 million from investors in Boulder, Broomfield, Larimer and Weld counties and residents in 15 states outside of Colorado as part of a Ponzi scheme.
Brooks took in the money allegedly to invest in an electronics resale business, but used new investors' money to pay "interest" to other investors. He also used the money for personal expenses, including $1.5 million for personal gambling.
"This sentence underlines not only the severity of this Ponzi scheme, but also my office's dedication to vigorously prosecute white collar crime in Colorado," said Colorado Attorney General John Suthers. "The severity of Mr. Brooks' scheme also should serve as a warning sign for Colorado consumers who might find themselves faced with unusual or strange-sounding investments."
Suthers encouraged consumers to be aware of several red flags that, according to SaveAndInvest.org and the Financial Industry Regulatory Authority (FINRA), should tip them off that an investment opportunity could be a scam:
• Consumers should beware of investment opportunities offered for a limited time only. Legitimate investment opportunities should not require a decision in a matter of hours.
• If it sounds too good to be true, it probably is: Investments offering large returns with virtually no risk do not exist. There are no sure things in the investment world.
• If the person pitching you on an investment is unregistered with FINRA that should send up a red flag.
• When a broker or person pitching you on an investment cannot describe how a fund or investment product works, that, too, should be a warning sign. Someone selling you an investment product or opportunity should be able to give you a clear description of how it works and the associated risks.
• An investment should always have accompanying documentation. If an investment product or opportunity does not have documentation or a stock ticker symbol, it might be a scam.
We learned over the past couple of years exactly how financially devastating Ponzi schemes can be as we followed the Bernie Madoff saga, which saw investors drained of billions of dollars.
If you believe you have been defrauded in a securities scam, contact the Securities and Exchange Commission Office of Investor Education and Advocacy (1-800-732-0330 or 202-772-9295).