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Former Georgia regent accepts deal regarding Ponzi scheme

A former member of the state's Board of Regents -- who are hand-picked by the governor -- agreed to what's known as a consent judgment regarding a Ponzi scheme that cost his investors around $23 million in losses.

In essence, the 66-year-old businessman used his longstanding presence in the community and his reputation to convince investors in the area's Indian-American community to buy promissory notes on which he promised a big return. In reality, the money was funneled into his failing business and his personal expenses -- like the new multimillion-dollar home he had built. In classic Ponzi fashion, money from new investors was paid to earlier investors to keep the scheme afloat.

He managed it for about two years -- until the U.S. Securities and Exchange Commission (SEC) charged him with fraud and three violations of the Securities Act.

The consent agreement allows him to avoid making an admission of guilt -- but he will be assessed considerable civil penalties at a future date. In addition, he still has to contend with criminal charges that have been filed by the Georgia attorney general.

Ponzi schemes are a common feature of high-stakes financial fraud -- and prosecutors aren't usually inclined to go easy on the people who run them. Many still remember the devastation wrought by the likes of Bernie Madoff, whose Ponzi schemes and underhanded fiscal dealings cost some investors their entire savings.

At the same time, Ponzi schemes often rise out of desperation. Sometimes, people are convinced that their failing businesses will turn around, and they'll actually be able to pay everyone back and make good on their promises. If you're over your head and are facing fraud charges, it's time to take action. Make sure that you speak with an experienced defender as soon as possible.

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