Investment Fraud

The menace of investment fraud

Stocks, commodities and bonds are things that most consumers invest in. The Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC) regulate these investments. The state securities also regulate the investments. Besides these huge sums of money are invested in tangibles like rare coins, art, precious metals, oil and gas lottery application services, and telecommunications. These are outside the purview of SEC and CFTC jurisdiction. These may also be subjected to the shared jurisdiction of the FTC.

It is surprising to note that the investment cases brought by the FTC in the 1996, that con men and scam artists took away a few thousands of dollars from gullible consumers. The FTC/NAAG Telemarketing Complaint System spoke about how investment frauds cover more than half of the reported dollar injury. Consumers have incurred losses of over $15,000. For some of them the losses that have been incurred have amounted to more than a few hundred thousand dollars per person. The FTC challenged two cases in 1996. The defendants in these cases more than $100 million were received by the defendants. This was taken from the thousands of consumers over the life of the frauds. This was followed by advertising that was effective. This was done on several national cable stations by the fraud promoters.

Investment frauds are quite similar to telemarketing. It targets older people who are not able to afford the devastation on their savings account. This is primarily because they are no longer working and these extraordinary incomes would give them the boost once in a lifetime. Senior Americans are less capable of repairing the damage of their savings when they are subjected to abuse and fraud.

Fraudulent investments use the various aggressive marketing tools such as infomercials and telemarketing to communicate to the consumers. State and federal securities registration laws are not paid any heed to at all. Thus all their sales promotion tactics profit projections, use of proceeds, and risk disclosures are never scrutinized by the regular law bodies. Consumers fall into the trap of good quality promotional materials and fine-print risk disclosures.

The Securities and Exchange Commission tell all consumers that they should be aware of the attractive telecommunications technology and other securities. The only set of arms that all consumers should have are their own awareness, diligence to find out and critically evaluate the proposed investment. Special care should be taken if the company is not registered with the Securities and Exchange.

All fraudulent promoters fill replication security handouts with "investment opportunities" that are totally similar to the various legitimate investments especially in the headlines. False promoters advertise incredibly high rates of profit, low risk investments in spite of them being absolutely capital intensive, long term and high risk. Fraud promoters often tell the about how consumers could boost their previous "investments" by getting new, allegedly money-spinning, paging licenses. These scam artists publish sensational stories of real investors in these fields to advertise fraudulent contributions.

Striving to control the menace

The FTC's has used various mutual, pioneering law enforcement measures and awareness messages to help combat antagonistic and ingenious investment fraud. Project Roadblock acknowledged fraud victims who had become permit holders, and "reloaded" them with deceptive offers of paging licenses. The FCC ultimately suspended the approval of paging applications awaiting further assessment of its measures and adjustments to its licensing processes.

The key is not to trust any person who promises high returns at little or no risk and this will prevent you from being trapped.