Deliberately using deception and false material facts to persuade investors into making certain financial decisions is a federal crime known as investment fraud. Essentially, investment fraud occurs when an individual or entity convinces others to invest their money or assets by using false information knowing it is untrue, or they use investor funds in a manner that was not mutually agreed upon by the investor.
Investment fraud schemes are typically characterized by very tempting low or no risk investments that guarantee returns. The individual or entity may at first provide consistent returns, have complex strategies, or have unregistered securities in order to instill confidence in the investor(s). These types of schemes can involve a variety of federal financial crimes including advance fee fraud, Ponzi schemes, market manipulation fraud, securities fraud, and pyramid schemes.
Texas Investment Fraud Lawyers | San Antonio, TX
If you or someone you know is under investigation for investment fraud, we urge you contact Goldstein & Orr. The penalties for investment fraud and other related crimes are particularly harsh and include time in federal prison as well as enormous civil and criminal fines. The experienced legal team at Goldstein & Orr can assess the facts of the case and immediately begin building a formidable defense strong enough to withstand the prosecution’s arguments.
Find answers to your burning legal questions today by calling our office at (210) 226-1463 or simply submitting an online contact form for your first consultation. Goldstein & Orr has offices in San Antonio, but we accept clients throughout the State of Texas including Bexar County, Austin County, Webb County, Sutton County, Travis County, Hays County, Fayette County, Dallas County, Crockett County, Reeves County, and Live Oak County.
- What is Federal Investment Fraud?
- Investment Fraud Schemes
- Relevant Federal Laws
- Federal Penalties for Investment Fraud
- Additional Resources
What is Federal Investment Fraud?
Investment fraud is typically used as an umbrella term to encapsulate various different types of schemes to defraud or fraudulent activity related to investments of some sort. Some do use the term interchangeably with securities fraud, which involves engaging in any kind of fraudulent or deceptive practice involving the sale of securities.
In the words of the Federal Bureau of Investigations, investment fraud is “the illegal sale or purported sale of financial instruments” and further explains that “typical investment fraud schemes are characterized by low- or no-risk investments, guaranteed returns, overly-consistent returns, complex strategies, and unregistered securities.” Investment fraud and other related crimes carry serious penalties including time in federal prison, criminal and administrative fines, restitution, and any other punishment imposed by the court.
Investment Fraud Crimes
Investment fraud is a relatively broad term that is often used for various different financial fraud schemes prohibited under federal law. Some of these include, but are not limited to:
- Securities Fraud – The practice where investors or stockbrokers make purchase or sale decisions on the basis of defective or false information, which they are aware of. In most cases, the individuals or entities who commit these crimes do so with a financial motive.
- Ponzi Schemes – These types of schemes promise high financial returns or dividends not available through a traditional investment. Individuals and entities who operate these schemes pay the original investor returns with funds from new investors. Eventually, the individual or entity will flee with the proceeds when they are not able to secure enough investors to pay prior investors.
- Pyramid Schemes – Often referred to as “franchise fraud” or “chain referral schemes,” pyramid schemes occur when an entity offers an individual distributorship or franchise to market a particular product. Typically, the entity will overpromise returns to the individual distributorships knowing that the information is false. The profit that’s earned from this scheme is from the sale of new distributorships rather than the sale of the product itself.
- Market Manipulation Fraud – When an entity creates artificial buying pressure for a targeted security, which increases the price of said security and is then rapidly sold off into the inflated market by the fraud perpetrators.
Relevant Federal Laws
A wide range of federal legislation regulates the investment and Securities and Exchange Commission (SEC) and enforces the law. The following are acts commonly used by federal prosecutors to file criminal charges against an individual or entity.
- Securities Act of 1993
- Jumpstart Our Business Startups Act of 2012
- Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
- Securities Exchange Act of 1934
- Investment Company Act of 1940
- Sarbanes-Oxley Act of 2002
- Trust Indenture Act of 1939
Federal Penalties for Investment Fraud
Typically, investment fraud is prosecuted as a federal crime by the U.S. District Attorney’s Office as well as the Securities and Exchange Commission (SEC). The penalties for investment fraud will depend on the facts of the case, the amount of money defrauded, and if any other related financial crimes were involved in the scheme. Listed below are the general penalties for investment fraud a person may face if convicted of the crime.
- Incarceration – If convicted, the offender may face a term in federal prison or jail.
- Criminal and administrative fines – The amount of fines will be determined by the circumstances and the type of fraud committed.
- Restitution – Restitution is typically imposed as an additional term of sentencing since the act of fraud usually causes monetary loss to a person or entity.
- Probation – Probation may be available to the offender if the court deems the decision fair and just. Often probation is granted if a single act of fraud occurs.
Investment Fraud Information | FBI – Visit the official website for the Federal Bureau of Investigations to learn more about investment fraud, tips on avoiding investment fraud, schemes related to investment fraud, and other white collar crimes.
18 U.S. Code § 1348 – Visit the official website for Cornell Law School to read the U.S. Code Chapter 18 Section 1348. Access the site to learn the elements of securities and investment fraud, penalties for the crime, and other important information.
Investment Fraud Lawyer, San Antonio TX
If you or someone you know has been arrested for investment fraud, contact Goldstein & Orr. Goldstein & Orr is a premier reputable defense firm with over 70 years of collective experience. We have the skills, extensive resources, and knowledge to take on any type of financial crime including investment fraud. Our lawyers have defended individuals of all backgrounds including high-profile individuals who have a lot on the line. Fight for your rights and freedom today with Goldstein & Orr.
Schedule your first consultation with Goldstein & Orr by calling our offices at (210) 226-1463. Goldstein & Orr has offices in San Antonio, but we accept clients throughout the entirety of the State of Texas.