If you are suspected of investment fraud then it is important to seek legal advice as a matter of priority. You will the specialist advice from experienced fraud solicitors used to handling this type of case. Investment fraud can take many different forms and can be through different mediums such as the internet or through brokers and agents amongst others.
One well known type of investment fraud has recently come to the fore again and this is known as a Ponzi scheme. This type of fraud was named after Charles Ponzi who perpetrated his fraud during the 1920’s. Anther famous perpetrator in recent years is Bernard Madoff in the US.
A Ponzi scheme is a fraudulent investment scheme offering very high returns to investors over a short period. After people invest returns are paid to separate investors not from profits earned but usually from money invested by new investors. The new investors pay the old investors and so the word spreads. At this stage there are no financial losers. The investors do not lose out but could still be considered victims as they probably would not have invested had they known the whole truth of the investment. Eventually the scheme is bound to collapse and the scheme originator disappears along with all the investments. Often these schemes are stopped by regulators long before a collapse of this nature due to the fact the promoter is often selling unregistered securities.
Another slight variant on this is a ‘pyramid’ fraud. This is very similar in nature but uses the investors themselves to recruit new investors into the scheme. There is usually a seemingly credible business and the more recruits the more payments are made and each time the originator gets a cut. Each new recruit is offered huge benefits if the scheme is expanded. The flaw is there is no end benefit. Only the originator, at the top of the pyramid, gets any significant benefit and as the layers of the pyramid gets wider the amount of benefit decreases until those at the bottom end up losing their entire ‘investment’.
In cases such as these a vast amount of documentation is generated and there are usually many witness statements from the investors to go through. Each investor will have considerable documentation which will be important to examine. It is important to be fully conversant with each alleged ‘victim’ as often the paperwork belies what they are saying. Picking up on these subtle points is often crucial to the preparation of a defence. We will robustly defend in these circumstances and will not shy away from vigorous cross-examination of alleged victims if there is more to their story than meets the eye.
At Stephensons we have an experienced team who can assist you at every stage of an investigation or prosecution. We can also deal with any ancillary matter such as restraint orders, confiscation proceedings and any other issues that commonly arise during investigations of this nature.
