Utah Democratic Congressman Ben McAdams is pushing a bipartisan bill that would allow victims of Ponzi schemes and other forms of investment fraud to recoup more of their money.
According to a 2017 U.S. Supreme Court ruling, federal regulators have a 5-year statute of limitations to get money back to victims of illegal investment schemes.
McAdams wants to change that. His bill, which passed the House last week 314-95, extends that to 14 years.
“They need the tools to ensure that when they prevail that innocent victims of that scam have some chance to get back at least some of their hard earned money,” McAdams said.
A similar bill has been introduced in the Senate. Critics of the legislation argue, though, that it would drag out already lengthy investigations. It can take the Securities and Exchange Commission years to work through these cases.
“Another reason to be cautious about extending the limitations period for SEC enforcement cases is that SEC investigations frequently take too long, and the existence of a reasonable statute of limitations acts as an incentive for the SEC staff to complete or close investigations,” University of Virginia Law Professor Andrew Vollmer said during a House Financial Services Committee hearing in June.
According to an analysis by the Utah-based investment fraud attorney Mark Pugsley, Utah has the highest per capita rate of ponzi schemes in the U.S.: 1.35 Ponzi schemes per 100,000 people.
“That is by far the highest in the country,” Pugsley said.
Utah’s per capita rate is roughly 2.6 times higher than the next highest state, Florida. Pugsley said working with the SEC to recover money lost to illegal investment schemes is “really a fantastic way that people can get repaid without having to hire a personal lawyer.”