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I'm somewhat out of the loop on this whole story -- can you explain how the IPO would have helped? What was his exit plan? My understanding of Ponzi schemes is that they always collapse eventually because everyone will want their money back sooner or later.

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big infusion of cash from the IPO might have been able to cover up the deficits, and the inevitable "cleaning things up to do the IPO" work could have bought them time to un-fuck a lot of the riskiest accounts.

then the IPO hits, you cash out, take your exit, and drink your mint julip or mojoto in Bermuda while the whole thing burns down 2 years later. whole lotta "not my problem" at that point, and every one would think you're a genius.

See Adam Neumann (WeWork) as an example of how to pull this off.

Or Zymergen: https://en.wikipedia.org/wiki/Zymergen

You need Saudi cash of last instance for this though.

IPO and restating earnings might have covered the tracks.

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