Investment Fraud

What is Investment Fraud?

Many different types of fraud can be charged under federal law, from mail and wire fraud to tax fraud and insurance fraud. One common type of fraud is investment fraud. There are a variety of circumstances that can result in investment fraud charges, and it is important to understand how federal law considers investment fraud and the types of charges that can be filed. If you are facing charges for any type of fraud or other white collar offense in Texas related to an investment scheme, you should seek help from one of our Dallas fraud defense attorneys. In the meantime, the following information can provide you with more information about investment fraud charges.

Investment Fraud or Securities Fraud

Investment fraud is often used as a relatively broad term to encapsulate different types of fraud schemes or fraudulent activity concerning investments. At the same time, the term investment fraud is sometimes used interchangeably with the term securities fraud. According to the Federal Bureau of Investigation (FBI), securities fraud “covers a wide range of illegal activities, all of which involve the deception of investors or the manipulation of financial markets.”

The FBI defines investment fraud as “the illegal sale or purported sale of financial instruments,” and explains that “typical investment fraud schemes are characterized by offers of low- or no-risk investments, guaranteed returns, overly-consistent returns, complex strategies, or unregistered securities.”

Federal Securities Fraud Statute

Investment or securities fraud charges can be brought under different federal laws depending upon the circumstances. Broadly speaking, however, many securities fraud charges are brought under 18 U.S.C. § 1348, or the federal law for securities and commodities fraud. Under that statute, securities fraud is defined as one of the following:

  • An attempt to execute or an execution of “a scheme or artifice to defraud any person in connection with any commodity for future delivery, or any option on a commodity for future delivery, or any security of an issuer with a class of securities that is registered under section 12 of the Securities Exchange Act of 1934 . . . or that is required to file reported under section 15(d) of the Securities Exchange Act of 1934”; or

  • An attempt to execute or an execution of “a scheme or artifice to obtain, by means of false or fraudulent pretenses, representations, or promises, any money or property in connection with the purchase or sale of any commodity for future delivery, or any option on a commodity for future delivery, or any security of an issuer with a class of securities registered under section 12 of the Securities Exchange Act of 1934 . . . or that is required to file reports under section 15(d) of the Securities Exchange Act of 1934.”

Different Types of Investment Fraud Schemes

There are many different kinds of activities that are included under the category of investment fraud, such as:

  • Ponzi schemes;

  • Pyramid schemes;

  • Hedge fund fraud;

  • Advanced fee schemes;

  • Hedge fund fraud; and

  • Embezzlement by brokers.

Contact Our Texas Fraud Defense Attorneys

Are you facing investment fraud or securities fraud charges? One of our experienced Dallas federal fraud defense lawyers can evaluate your case and can provide you with more information about building a defense strategy that is tailored to the facts of your case. Contact the Law Office of Patrick J. McLain, PLLC for more information about how our firm can assist you.

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