A Ponzi scheme, a.k.a., a pyramid scheme, is insolvent almost by definition. One investor’s “principal” investment becomes an earlier investor’s “interest” and thus the Ponzi entity’s liabilities exceed its assets at any given time.
When the recent alleged Petters and Madoff multi-billion dollar schemes collapsed and came to light, they left “investors” looking to recover their misappropriated funds, of course.
Some things for defrauded clients might want to talk with a lawyer about: (1) your own “returns” (if you received any) could be someone else’s money (that is, an innocent later “investor”); under bankruptcy rules and fraudulent conveyance law, this money may be recouped from you by an appointed receiver or bankruptcy trustee, even if you are wholly innocent; (2) you will almost certainly not get 100 cents on the dollar, perhaps not close to it, and it could take well over a year before you get any recovery; (3) consider a contingent fee arrangement with counsel so you are not paying more to recover than you ultimately receive as a recovery. (But NOTE this article in the 12/13/08 Wall Street Journal suggesting a potential recovery through SIPC, Securities Investment Protection Corp., and also advising against hiring a lawyer because there is unlikely to be any money at the conclusion of any lawsuit to recover stolen funds.)