5 ways to recover from a Ponzi scheme
By Greg Saitz • Bankrate.com

Hey you, got some money you want to invest? This is a can't-miss deal; good, no, great returns; stable performance even in bad times; and to top it off, everything is guaranteed.

Interested?

Unfortunately for many investors, the answer was yes. But what they invested their money in wasn't some sort of special high-interest CD or high-tech stock trading system that couldn't lose. It was a Ponzi scheme, a fraud that uses cash from newer investors to pay those attractive returns to older investors.

That is, until the scheme collapses.

In the past several months, thousands of investors who thought they had accounts worth billions of dollars have discovered it was all illusory. Earlier this month, Bernard Madoff pleaded guilty in federal court to running a Ponzi scheme that prosecutors said could involve more than $64 billion, by far the largest such fraud ever. In February, regulators charged Robert Allen Stanford and several of his companies with operating an $8 billion investment fraud.

Government regulators and prosecutors also recently filed civil and criminal cases against a handful of other money managers involving tens to hundreds of millions of investors' dollars.

"They're all depressed," says New York tax attorney Harold Levine of his Madoff investor clients. "Clearly people's lives have changed. Some people are in denial. Some people understand it. They're all angry."

So what do you do if you've been caught up in one of these scams? Here are five suggestions that might help.

1. Go to the shoebox
The first thing a victim should do is collect as many records as he or she can find relating to the investment, according to Boyd Page, an attorney who specializes in representing investors at the Page Perry law firm in Atlanta.

That's important because those involved in investment schemes often don't keep records, have destroyed the records, or the files they do have are in disarray and not complete, Page says. Gather account statements, canceled checks you sent or checks sent to you. Also look for anything acknowledging your investment such as emails or letters that may have trumpeted the alleged performance.

2. Visit the courthouse
You can file a lawsuit to try to recover your money, but there are lots of variables with this avenue that can make a big difference in the end. Much of it has to do with who you sue and the assets he or she may have.

"Generally speaking, legal actions directly against the perpetrator have little likelihood of being economic," Page says.

There are several reasons for this. First, chances are good that whoever ran the Ponzi scheme was living life high off the hog -- private jet flights, fancy vacations, lots of lavish spending. Second, once a fraud is exposed, the remaining assets of the firm and its operators almost always are seized by the government or court-appointed trustee in bankruptcy court.