It can't be confirmed, but word has it that the FBI is currently investigating about 500 alleged Ponzi schemes. Few of them will rival the mega-frauds of Bernie Madoff and Allen Stanford, but the cumulative effect is going to be far-reaching. And the proliferation of scams seems so pervasive that it's only a matter of time before a Ponzi scheme is playing at a theater near you, even if you live in rural South Dakota.

Entire communities from Antigua to Palm Beach are being devastated, sending waves of former retirees out looking for work. One hears about folks like Arthur Nadel and Nicholas Cosmo, but stories about $4.4 million schemes that target the hard of hearing or $19 million scams aimed at the Haitian community in Brooklyn wind up buried on page 37.  

Ultimately, both the profession and regulators are going to have to address the issues. To be sure, no amount of regulations or professional codes of conduct can prevent brazen thievery by people determined to steal, but what is particularly alarming is the way the SEC failed to investigate Madoff's fraud, probably the biggest in history, after analyst Harry Markopolos presented them the case gift wrapped on a silver platter. The fact that the FBI has reportedly assigned more than a thousand agents to the alleged Ponzi schemes speaks volumes about either the incompetence or lack of resources at the SEC-or both. Telling victims-and their friends and relatives-that this is what happens when suckers like you try to play with the big boys isn't going to improve the climate for investment, or the greater financial services business.

It's no coincidence why all these Ponzi scamsters are surfacing at the same time. Investors' traditional holdings like mutual funds, securities and real estate have all collapsed in value, prompting them to take inventory of their assets. Who knows how many of these Ponzi schemes might have continued for years had it not been for the crash of 2008. For now, the vast majority of honest advisors have enough problems dealing with asset selection, portfolio quality and client trust without this.