I'm going to do some more research on the issue as I am not fully knowledgeable on the differences between a bitcoin ponzi and a "real" ponzi, but basically the downside to bitcoin ponzis are the same as "real" ponzi schemes.


What is a Ponzi Scheme?
While most states have laws against such schemes, it is primarily a federal issue, and the federal law is pretty clear on the matter.  

The Securities and Exchange Commission defines a ponzi scheme as: "an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors."
Red Flags of a Ponzi Scheme:  

• High investment returns with little or no risk. Every investment carries some degree of risk, and investments yielding higher returns typically involve more risk. Be highly suspicious of any “guaranteed” investment opportunity.
• Overly consistent returns. Investments tend to go up and down over time, especially those seeking high returns. Be suspect of an investment that continues to generate regular, positive returns regardless of overall market conditions.
• Unregistered investments. Ponzi schemes typically involve investments that have not been registered with the SEC or with state regulators. Registration is important because it provides investors with access to key information about the company’s management, products, services, and finances.
• Unlicensed sellers. Federal and state securities laws require investment professionals and their firms to be licensed or registered. Most Ponzi schemes involve unlicensed individuals or unregistered firms.
• Secretive and/or complex strategies. Avoiding investments you don’t understand or for which you can’t get complete information is a good rule of thumb.
• Issues with paperwork. Ignore excuses regarding why you can’t review information about an investment in writing, and always read an investment’s prospectus or disclosure statement carefully before you invest. Also, account statement errors may be a sign that funds are not being invested as promised.
• Difficulty receiving payments. Be suspicious if you don’t receive a payment or have difficulty cashing out your investment. Keep in mind that Ponzi scheme promoters sometimes encourage participants to “roll over” promised payments by offering even higher investment returns.

I think I've been the victim of a ponzi scheme.  What can I do?
Now, normally if you suspect you have been a victim of a ponzi scheme, you would contact the SEC or the U.S. Attorney's office in your jurisdiction.  This would get the ball rolling as a possible criminal investigation.  But a criminal investigation doesn't help you get your money back.  You then have two options.  You could file suit in a federal court against the principals of the scheme, and ask for damages and injunctive relief (asking the court to shutdown the ponzi scheme).  This is terribly expensive.  Attorneys that handle these matters do not come cheap, and the cost of discovery and litigation for these types of cases runs into the hundreds of thousands of USD.  Your second option is you could allow the investigation to go forward by the government and wait for their findings.  If the government succeeds in convicting the principals of the charges brought against them, this significantly makes your job of bringing the lawsuit much easier and cheaper.  The downside to option #2 is that by this time there won't be any money left.  The principals will have skipped town with it, used it all in their defense, or by the time the ponzi scheme was discovered the money was gone already.  The investors that lose in these cases often would be more successful in putting toothpaste back in its tube than recovering their lost investment.

Those that operate a ponzi could be charged with various felonies racketeering felonies such as:

• 18 USC 1341 (mail fraud)
• 18 USC 1343 (wire fraud)
• 18 USC 1956(a)(1) (laundering of monetary instruments)
• 18 USC 1957 (engaging in monetary transactions)
• 18 USC 1956(h) (conspiracy to launder monetary instruments and engage in monetary transactions)

Can "pass through" operators be criminally charged or civilly liable for their participation in facilitating the scheme?
The answer to this is almost assuredly yes.  Every state has a different conspiracy statute, but they generally say the same thing:

A person or business generally is guilty of conspiracy to commit a crime if that person or business does one of the following:

• with the purpose of facilitating or promoting its commission, agrees with another person or business to engage in conduct that constitutes a crime or an attempt or solicitation of a crime; or
• agrees to aid another person or business in planning, committing, or attempting to solicit a crime.

It is not a defense to the charge of conspiracy that the person did not know what they were doing was illegal.  
(See a few posts below for a more detailed discussion of pass-through operators)

What about the Bitcoin Savings & Trust debacle?
According to an article at theverge.com "[pirateat40] claimed that BS&T was sitting on 500,000 BTC on the day of the shutdown, worth more than $5.6 million USD at today's price of $11.38."  
http://www.theverge.com/2012/8/27/3271637/bitcoin-savings-trust-pyramid-scheme-shuts-down
At this point, the shutdown was several weeks ago.  In a USD ponzi scheme case, if I were a large investor (or the attorney of a large investor) my first goal would be to find out what assets he is in possession of and have them frozen.  The only way to do so is with a court injunction.  With minor research, it appears that pirateat40 is a Texas resident, and what is believed to be his real name is floating out there.  A Texas private investigator would likely be able to confirm this for me pretty quickly.  The suit could be filed either in Texas state court or preferably Texas federal court.  The suit would ask the court for an emergency injunction and a preliminary injunction.  At the same time as filing the complaint, I would also serve discovery.    Best case scenario the court would grant the emergency injunction, and the assets would be frozen as soon as I was then able to serve his bank with the order.  Otherwise, he would have 30 days to answer discovery and the complaint, and we would proceed as a normal lawsuit.

The problem here is this isn't a USD ponzi scheme.  It is a BTC ponzi scheme.  So while I could still file with the court, and still likely get my injunction, where do I serve it?  Where do I go to freeze his assets?  He isn't using a bank for his BTCs he is using an online wallet.  This complicates the matter significantly.  

Bottom Line
Ponzi schemes exist because some people get obnoxiously rich off of them.  While there are differences between a ponzi scheme and a pyramid scheme, in both, the principals and the early adopters are the ones that make the money.  At some point however, the money starts drying up, as new investors become harder to come by.  These newer investors are the ones that lose most if not their entire investment.  Unfortunately once this happens, there is no way they can fully be compensated.  Their investment has already been distributed, and no new money is coming in.  

If there is anything that you would like more detailed information on regarding ponzi schemes, please let me know.  If you believe there is anything I should know that is unique to a bitcoin ponzi scheme versus a "real" ponzi scheme, please let me know, and this might change my evaluation.  

If this summary of the law of ponzi schemes has been helpful for you, please feel free to contribute to: 1Hu8aScogCkcphFVcR376y1T2mMdqiSd1r
I do quite a bit of pro bono work, and any extra I can earn online providing legal advice, allows me to spend more time during the day assisting and providing high quality legal services to the indigent and those that simply can't afford high priced attorneys.

Thanks   Much obliged. 

Thanks, I'm glad I could help.   

Thank you for the suggestion, and thank you for the welcome.  

 

Defamation is a false statement made about a person that is injurious to his reputation, published to a third party, that causes damage.  Any living person, corporation, or other legal person may be defamed.  There is, however, no cause of action for defamation of a deceased person.

The term defamation is made up of two different torts.  Slander and Libel.  Slander is the publication of defamatory matter by orally spoken words.  Libel is the publication of defamatory matter by written or printed words.  Therefore, when posting on a message board such as this, libel would be the tort that could be sued on.  
(The exception to this rule, which I have never really understood why, is that statements made on television or over the radio are considered libel, rather than slander, even though the words are orally spoken.  I can only imagine this is because the words probably originated from some type of script that was written first.)

Elements that must be proven in court to succeed on a defamation (libel or slander) claim include:
1) Defamatory Language;
2) Of or concerning the plaintiff;
3) Published;
4) The defamatory language must be false;
5) The defamatory language must damage the plaintiff's reputation; and
6) Fault Standard

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Now lets address each of these elements individually, as some are not self explanatory.  (But note, even if all 6 of these are not met and the plaintiff cannot prove defamation, the plaintiff may have other torts he can turn to, such as Intentional Infliction of Emotional Distress.}

1)  Defamatory Language is any communication about the plaintiff that reflects unfavorably on the plaintiff and that in turn injures his good name or reputation.  (If the plaintiff already has an incredibly bad reputation, such as is a convicted murderer, then it may not be possible to damage his reputation, and thus that plaintiff would be defamation proof.)

If the language is not defamatory on its face (obvious) then the plaintiff will have the opportunity to prove "inducement".  Inducement is simply a fancy legal word that means additional facts/circumstances that make the language defamatory.  The person that hears the language does not have to believe it is true, he just has to understand it is derogatory toward the person.  (But if the person doesn't believe it is true, this probably reduces plaintiff's damages.)

It is not illegal to call someone a name.  ("You're a jerk!"  "You're a #%@%$@#!!!!")
But opinions may be actionable if they are based on an underlying fact.  ("I think X is a thief because I think he once stole money from me.")

2) Of or concerning the plaintiff:  If the defamatory language used the name of the plaintiff, this is obvious.  But if it did not use the name of the plaintiff, outside facts may be used to show the recipient understood the communication to be concerning the plaintiff.  This putting into context to satisfy this element is known by the legal term of "colloquium".

An entire group/association of individuals (such as the moderators of this forum) can be defamed.  If the group is small enough, under 12 people, then all members of the defamed group could probably recover.  But the general common law principal is that once the group gets past about 12 though, none can probably prove they have been defamed, and therefore they will not be able to recover.

3) The communication must have been published.  Publication is a legal term that simply means at least one third party was the recipient of the information.  If I say to you, “You’re a thief!” this is not defamatory, as the statement was not made to a third person.  

If the defendant publishes multiple times defamatory language to multiple people, then each publication is a separate lawsuit.  However, if the defamatory language is heard by multiple people at the same time, then there is only one lawsuit.  Example: TV broadcast heard by 5 million people.  Only one lawsuit here.  

Repeating defamation is also defamation.

4) The statement must be false.  If the statement is true, even if made out of spite or malice, and even if it destroys the person’s reputation, no liability attaches.  The general common law rule, and majority opinion in the United States is that the burden of proving the truth is on the defendant.  In a few states however, the plaintiff must prove falsity.  The Supreme Court of the United States has held that in cases involving the media and "newsworthy events", the plaintiff must prove falsity due to the protections of the 1st Amendment.

5) There must be damage to the plaintiff's reputation in order for him to be able to recover.  The majority rule is "Libel per se".  This means if the statement is defamatory on its face (obvious), the court will presume damage to one's reputation.  Here you wouldn't have to prove special damages (loss of job, lost profits, etc.).  The minority rule is that yes, you must prove actual harm in any defamation case.  A court case out of New Jersey lists 5 exceptions to the minority rule.  

• Where the D makes a statement that affects the P’s ability to earn a living
• Defamatory publication where the D suffers from a lowsome communicable disease (this has been limited to leprosy and STDs)
• Defamatory publication that the defendant has committed a crime involving moral turpitude (child sexual abuse, bigomy, incest, etc.)
• Defamatory publication of the sexual immorality of a female
• Defamatory publication of the sexual immorality of a female
• False accusation that the plaintiff is a racial bigot.
  

6) Fault Standard refers to whether we are talking about a public official or person (actor/musician/politician) being defamed or a private person.  The fault standard for defaming a public official requires actual malice to be used in the publication.  Malice means that by clear and convincing evidence the defendant made that publication knowing it was false OR by clear and convincing evidence that the defendant made the publication recklessly.  Reckless means that the defendant in fact had serious doubts to the truth of what he was publishing, and he published it anyway.

Who is a public official?  The occupant in any position of any branch of government, if that person appears to the public to have substantial responsibilities or control over governmental affairs.  So the governor of a state would qualify, but his secretary would not.  

If the plaintiff is a private person, the fault standard drops from the high standard of malice, to mere negligence.  

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Defenses to defamation include consent, truth, redaction, absolute privileges, and qualified privileges.
Consent - If the plaintiff agrees to the publication he cannot sue later on that same publication.
Truth - If the statement is true, it is never defamation.
Redaction - If the defamatory article was published in good faith, its falsity was due to an honest mistake, there were reasonable grounds for believing that the statements in the article was true, and the publisher within 10 days retracts the statement, then the plaintiff can only recover his actual damages.

Absolute privileges – Even if the D acted with malice these are valid defenses:
Judicial proceeding privilege -  Defamatory statements made by someone who is participating in a judicial proceedings (the lawyers, judge, juror, witness) are absolutely privileged.  
An attorney is absolutely privileged from defamation suits if:

• the communication was made by an attorney acting in the capacity of counsel
• the communication was related to the subject mater of the proposed litigation
• the proposed proceeding must be under serious consideration by the attorney acting in good faith, and
• the attorney must have a client or identifiable prospective client at the time the communication is published.

Those involved in a legislative or executive governmental proceeding.
Spousal communications are privileged – I can’t be sued if I defame you to my wife.

What damages are recoverable in a defamation suit?
i)   Compensatory Damages (the plaintiff's actual loss)
ii)   Punitive Damages (those designed to punish the defendant for making the statement.  These can be quite heavy in some cases)  To recover for punitive malice must be proven.  

Qualified Privileges
Protection of Private Interest - Example: Mother tells daughter that her fiancé is having an affair with someone, and therefore she shouldn’t marry him.  This turns out to be false.  As long as mom is acting reasonably, acting without malice, she can’t be held liable for defamation.
Protection of Public Interest - Example: The defendant reports what he believes to be criminal activity to the police, and it turns out that is wrong information.  The person reported was not doing anything illegal.  As long as he didn’t report with malice then he is protected from defamation liability.

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International Defamation:
Article 17 of the United Nations International Covenant on Civil and Political Rights states

    1. No one shall be subjected to arbitrary or unlawful interference with his privacy, family, home or correspondence, nor to unlawful attacks on his honour and reputation.
    2. Everyone has the right to the protection of the law against such interference or attacks.

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TL:DR version - Yes, you can be sued for making false statements about someone even over a message board such as this.  It is especially easy to prove, since the record is public and written.  Evidence is not difficult to gather in these cases.  

The most basic legal advice that can be given in these cases is don't do it.  Typically there is very little to be gained by posting negative comments about someone on the internet.  That being said, if it is an honest review of a product/service that has been sold or offered, then by all means be honest in your review.  Remember, the most powerful defense against a defamation lawsuit is the truth.  That is why I make sure that even if I am angry at someone, and even if I am only giving my "opinion", it may be best to just walk away from the screen for a few minutes.  Cool off.  Consider what you are about to type, and whether you are about to get yourself into legal hot water.  Name calling, while inappropriate and childish is not illegal.  It just makes you look like a fool.  

If you feel you have been defamed and your reputation injured (even your online reputation) and you have suffered damages, contact an attorney.  (Or just PM me the details and I'll let you know in my opinion whether you have a good case.)  Most attorneys will give you an initial consultation for free, but be wary.   Most attorneys have little to no experience with international defamation, and most have never even heard of Bitcoins.  Bitcoins are an emerging market, and reputation is huge here.  A false statement about a bad transaction can have severe consequences.  


If this summary of the law of defamation has been helpful for you, please feel free to contribute to: 1N8LfVL4FeMRaZRSgkKiY9c8wuPdeaKfM8
I do quite a bit of pro bono work, and any extra I can earn online providing legal advice, allows me to spend more time during the day assisting and providing high quality legal services to the indigent and those that simply can't afford high priced attorneys.

The areas I know best are criminal law, tort law (personal injury/wrongful death/defamation/etc.), and business law.  

Shoot me an email at ncontendere AT gmail.com and provide me with as much detail as you think I need.  Make me an offer on what you think the answer/advice is worth based on how complicated it is.  Most of your questions I'll be able to answer right away.  Some might require research if it is a highly technical matter, and obviously I would ask for a little bit more for those issues.  

I am only knowledgeable about American law.  Sorry EU.  But make sure you tell me what state you are in, as the laws are very specific to each state.  This is especially important if your question is of a criminal nature.  

Hope to help as many of you as possible!

I'll come back and visit, I promise!

Only 17 minutes left for me before I hit 4 hours now....lol   tick, tick, tick....

I've been reading up on that site tonight.  Very interesting idea someone had when they came up with that.  I may actually suggest that for some of my civil clients that have very small disputes. 

And as far as you being in the EU, I won't even pretend I could answer any kind of legal question over there.    Completely different as far as I know.   

Now that's true.  I'm sure you would get quite interesting responses on craigslist.  

Q: My neighbor's dog keeps crapping on my lawn.  Can I sue him?

A: Nah, the law let's you poison dogs in that case.  Statute 25-25-2525 says use strychnine.

lol

I don't think you'll find anyone that will disagree with that statement. 

Excellent idea.  

Completely understandable.  I suppose you don't, but there are just too many ethical rules (and for that matter malpractice issues) that come with providing legal advice online to put my name or BAR # out there.  So anyone that doesn't want to risk advice from someone they don't know, I hold nothing against them.  The fact that I have access to Westlaw for research purposes, might convince some.  But the bottom line is, a few people will just take the chance (not really anything to lose other than a BTC or so), get their problems solved/questions answered and provide future references.  Gotta start somewhere  

The areas I know best are criminal law and tort law (personal injury/wrongful death/defamation/etc.)  

It's late at night.  I know some of you have some burning legal questions and you might not be able to afford me (or someone like me) during the day at my office. So here I am, fire away.  Email me at ncontendere AT gmail.com the question if it contains personal details and I can give you a personalized answer.  Usually I can answer right away.  If I have to do research, then I'll quote you a price before I do anything.  But very cheap and reasonable.  I do it mostly for fun not for money.  I enjoy this profession and do alot of pro bono work.    

Disclaimer:  I'm staying anonymous.  I'm not your attorney.  Just telling you what the law is and what your options are.  


Edit:  Make sure you tell me what state you are in.  That makes all the difference with criminal law.  

What's interesting about those?  No one is asking for Romney's college transcripts either, and he went to the same school.  Is there some conspiracy theory that Obama didn't really go to Harvard? 

I doubt he does, but I would imagine someone is going to respond to Larry Flynt's bounty of $1 million for his tax returns. 

tick...tick...tick...I'm at 49 minutes....tick...tick...tick...50 now  

Of course since I'm so new here myself, I don't have the answer for you, but if I was just guessing I would think it's an automatic process after a certain point.  (I've read 5 posts and 4 hours).  It would be too tedious if they had to manually upgrade everyone. 

Well since I'm new to Bitcoins and new here, and my wallet is empty, I guess it wouldn't hurt to see how generous the members of the bitcoin community is 

1FQJMQfH8nBu7imbQqGjQCXzdMH1fpy2Qh

Hey guys, just wanted to introduce myself.  Attorney here.  I mostly practice in criminal law, and tort actions (personal injury/wrongful death/assault/battery that kind of thing).  Hope to meet some great people and help them out!  See you around the forums