Largely considered to be a white collar crime, investment fraud can take a number of different forms. Among the most popular types of fraud that Illinois residents should be aware of is the Ponzi scheme. These schemes involve paying out returns to existing investors using capital invested by new participants in the plan. They are characterized by their larger than average returns as well as being marketed as little or no risk to investors.
An advance fee fraud involves an individual giving money to a person or entity in hopes of receiving a larger payout later. Typically, an individual may be told that he or she has won the lottery or some sort of sweepstakes. However, he or she must first send a check to cover income taxes or as a participation fee, and requests may be made in the future for what are deemed unanticipated costs or additional taxes.
Often referred to as a “pump and dump”, investors may fraudulent aggressively market a penny stock to artificially inflate its price. Brokers may receive a bribe for their role in convincing investors to buy the stock. Once the price hits a specified target, those who are in on the plan will sell their shares and leave others with a potentially worthless commodity.
Those who are charged with being part of a Ponzi scheme or any other type of investment fraud may wish to talk with an attorney. Legal counsel may be able to establish that investor money was used to acquire a legitimate asset and that efforts were made to achieve a return on investor capital. That may be enough to result in an acquittal or to have one or more charges dropped or reduced through plea negotiations.