Investment Fraud Recovery for Victims – All Isn’t Lost!
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http://www.longislandtaxresolution.com/
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1) What is Investment Fraud?
• Investment fraud occurs when people are manipulated or deceived while investing—to the point where any number of monies or property may be stolen by scams or brokers.
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2) Common Types of Investment Fraud
• Investment fraud comes in a number of forms and guises. Some of the most common ones include the following:
• Ponzi schemes
• Pyramid schemes
• Pump and dump schemes
• Advance fee fraud
• Microcap fraud
• Affinity fraud
• Promissory note scams
• High-yield investment program
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3) Ponzi Scheme
• A Ponzi scheme is a fraudulent investment plan.
• Ponzi schemes promise high financial returns or dividends not available through traditional investments.
• The scheme is named after Charles Ponzi, who duped investors using this technique in 1920.
• The organizers pay “dividends” to initial investors using the funds of subsequent investors rather than from profit earned.
• Usually Ponzi schemes collapse when new investors cannot be attracted.
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4) Tips for Avoiding Ponzi Schemes
• Be cautious of someone promising an investment return that is unnaturally high or steady.
• Avoid investments if you don't understand them or can't get gather appropriate information about them.
• Conduct the proper research before selecting investments. Also, consider doing background checks on the people with whom you invest.
• Consult unbiased broker or a financial advisor before investing in the scheme
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5) Pyramid schemes
• Pyramid schemes make money by continually recruiting new participants.
• In pyramid schemes, the victims themselves are induced to recruit more victims through the payment of recruitment commissions.
• The fraudsters promise sky-high returns in a short period of time.
• Pyramid schemes are also referred to as “franchise fraud” or “chain referral schemes.”
• Individual is offered a distributorship or franchise to market a particular product.
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6) How to Avoid Pyramid Schemes
• Check with the Securities and Exchange Commission (SEC) to see if it is a registered investment.
• Be wary of investors who promise high yield returns, or quick returns with no risk.
• Thoroughly analyze the prospects.
• To avoid a pyramid scheme meltdown of your assets, diversify your investment portfolio.
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7) Pump and Dump Schemes
• Promoters attempt to artificially boost the price of a stock with false information (pump).
• Promoters then gain by selling their shares after the stock is pumped.
• The inflated shares will sell off rapidly into the security market by the fraudsters (dump).
• Once fraudsters stop hyping the stock, the price typically falls and investors lose their money.
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8) How to Avoid Pump and Dump Schemes
• Don’t believe any hype before you do your research.
• Recognize that promises of quick gains are rarely true.
• Find out where the stock trades independently verify claims.
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9) Advance Fee Fraud
• This occurs when an investor asks to pay upfront or in advance for a fee, payment, or commission for the deal to go through in later date.
• Advance fee scheme generally target investors who already purchased underperforming assets.
• There are many variations of advance fee schemes.
• A company claims to be able to clean up your credit report and offers to do so in exchange for an advance fee.
• Con artists will offer to find financing arrangements for their clients who pay a “finder’s fee” in advance.
• They require their clients to sign contracts to pay the fee in advance.
• When they are introduced to the financing source, victims often learn that they are ineligible for financing only after they have paid the finder.
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10) Tips for Avoiding Advanced Fee Fraud
• Know the individuals or parties with whom you are dealing.
• Make sure you fully understand any business agreement before entering into it.
• Don't enter into an agreement with strangers if you did not initiate the contact.
• Be aware of businesses that operate from post office boxes or mail drops but do not have a street address.
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11) Microcap Fraud
• Microcap stock fraud is a form of securities fraud involving stocks of "microcap" companies.
• Microcap companies have small amounts of assets and low stock prices.
• Microcap stock fraud takes place among stocks traded on the OTC Bulletin Board and the Pink Sheets.
• It’s important to find accurate information when dealing with microcap stocks or penny stocks.
• Many of these companies don’t file reports with the SEC, which allows fraudsters to produce false and misleading information to trade.
• They usually disseminate information through email spam, paid promoters, and internet message boards.
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• This type of investment fraud targets members of particular group, such as religious or ethnic communities.
• Fraudsters who promote affinity scams frequently pretend to be members of the group.
• They enlist respected leaders from the group to spread the word about the scheme, convincing them it is legitimate and worthwhile.
• Often these leaders themselves become victims of the fraudster’s ruse.
• These scams exploit the trust and friendships that exist within groups of people.
• It is difficult for the law enforcement officials to detect an affinity scam.
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12) Affinity Fraud
13) How to Avoid Affinity Fraud
• Check out the background information when an opportunity is presented.
• Never make an investment solely based on the recommendation of a member of an organization or religious or ethnic group to which you belong.
• Investigate the investment thoroughly and check the details of every statement.
• Do not fall for investments that promise spectacular profits or "guaranteed" returns.
• Fraudsters often avoid putting things in writing, but legitimate investments are usually in writing.
• Fraudsters are increasingly using the Internet to target particular groups through e-mail spams.
• If you receive an unsolicited e-mail from someone you don't know, containing a "can't miss" investment, it is best is to ignore the mail or forward it to concerned authorities.
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• A promissory note is a form of debt that is similar to a loan or an IOU.
• For a set period of time, an investor agrees to loan money to the company.
• The company promises to pay the investor a fixed return with principal amount and interest.
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14) Promissory Note Scams
15) How Promissory Note Fraud Occurs
• The fraudsters may or may not be affiliated with the company.
• Fraudsters persuade agents to sell promissory notes by assuring them large commissions.
• These agents often do not have a license to sell securities.
• They promise a high, fixed-rate return with very low-level risk.
• Fraudulent promissory notes are sometimes issued on behalf of fictitious companies.
• The fraudsters use a portion of the money they collect from investors to pay the sellers their commissions.
• The fraudsters typically abscond with the rest.
• Promissory note scams often target elderly investors.
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16) Tips to Avoid Promissory Note Scams
• Generally, corporate promissory notes are not sold to the general public.
• If someone calls you or knocks on your door trying to sell you a promissory note, it is often a scam.
• Investors should investigate the person who is selling the promissory notes.
• Sellers should be licensed in their state, so confirm they are before conducting business.
• Insurance agents cannot sell promissory notes.
• Beware of promises of "risk free" returns.
• Compare the rate of return on promissory note.
• If the seller promises an above-market rate on a short-term note, proceed with caution.
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17) High Yield Investment Program (HYIP)
• HYIP is actually a type of Ponzi scheme.
• It promises unsustainably high return on investment.
• The organizer’s goal is to steal the investors’ money.
• This scam is also known as the "prime bank scam".
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18) How to Avoid High Yield Investment Program Scams
• Think before you invest in anything.
• Independently verify information about the investment.
• Be aware of business deals that shroud in extreme secrecy.
• Avoid those who promise excessive guaranteed returns.
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19) What To Do If You’ve Been Defrauded
• While prevention is the best defense mechanism against investment fraud, you can still take action.
• Action steps include the following:
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20) Put It In Writing
• The first step is to put your complaint in writing with the broker, firm, or organization you believe has defrauded you.
• This serves two purposes:
o It demands a response.
o It starts a paper trail for future reference.
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21) Contact Appropriate Resources
• Contact appropriate regulatory bodies, such as the following:
• Securities and Exchange Commission
• State Securities Regulator
• National Association of Securities Dealers
• Federal Bureau of Investigation
• Better Business Bureau
• Local district attorney
• Local Postal Inspector’s Office
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• These entities have the authority to conduct in-depth reviews and will accelerate the process.
• Be sure to provide them with concrete and factual evidence of the fraudulent activity you believe has occurred.
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22) Find Representation
• Victims of investment fraud may be eligible to recover a portion of their losses through tax deductions.
• According to Section 165 of the Federal Tax Code, taxpayers are eligible for reimbursement for losses incurred in the same tax year.
• To investigate this possibility, you will need the services of a tax resolution specialist.
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23) We Will Help You
• Contact us today for help in recovering from investment fraud.
• It is a fairly complex process that requires the expertise of certified tax professionals.
• We know the IRS’ processes and rules.
• Our highly qualified team of tax experts can help you prepare your theft loss report.
• We will work to compensate your losses.
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