Very often there may be a Ponzi Scheme financial theft, in which certain taxpayers have profited since they made early investments and were paid unusual profits that did not exist. Often taxpayers in Ponzi Schemes that have benefited from the financial loss of others are called upon by a trustee to forfeit the profits made in the Ponzi Scheme.
Taxpayers who do forfeit such funds (the Clawback) have the ability to either deduct their funds against other income and/or to go back in time to when the false profits were made and receive a tax refund of the taxes paid at the time. Often this is a better source of tax refunds since the profits may have been made in extremely high tax brackets, thus leading to increased refunds.
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