EARLY INVESTORS TOO

Bernie Madoff ran one of the biggest Ponzi schemes for decades before the scheme collapsed in the aftermath of the 2008 financial crisis.

Many investors lost their life savings.

It is worth noting that earlier investors, who cashed out up to a time period of six years before the collapse of the Madoff scheme, are being investigated and summoned to return the profits earned via a claw-back law.

Currently, the authorities seem to be going after the founders of schemes running illegal pyramid operations, but not many of those actively involved have been made to pay the price.

The pursuit of the money trail must not just stop at the founders but also the whole network, including indirect underlings.

The authorities must go after the early bird and top earners of the money games via a criminal forfeiture suit to reimburse the profits and introducer commission earned. This is to compensate the latecomers who have been innocently misrepresented and coerced.

The income earned by the active up lines is deemed dirty profits since they cannot be declared as a legitimate taxable income source under the Income Tax Act 1967.

If the authorities go after all the early investors who have made money from the illegal schemes, then there will be less motivation to participate in such schemes when the profits realised can be potentially subjected to being paid back in addition to fines, penalties and jail time for inducing people to join such schemes.

Those who promote such schemes, including the company employees, know well that it is a fraud. Hence, they must also be held liable for third party losses. This would be a long-term deterrent to curb the money game menace when the liabilities of those promoted by the promoter are borne by the introducer.

Only the innocent and passive investors are to be spared from prosecution and worthy of being compensated.