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FBI Reports: Investment Fraud Schemes and Investment Losses on the Rise in 2012

David P. Meyer

FBI Reports Unprecedented Rise in Investment Fraud Schemes

The Federal Bureau of Investigation has reported an unprecedented rise in investment fraud schemes and investor losses since 2011, according to the Department of Justice. Victims of the schemes have lost more than $20 billion in less than two years.

“This staggering number includes cases where the total amount victims lost range from tens of thousands of dollars to hundreds of millions, and, in some cases, billions in hard-earned savings,” wrote the Department in a recent release.

Though approximately 800 federal fraud defendants have been charged, tried, pled, or sentenced since 2011, authorities don’t seem to believe there’s any reason to expect the current rise in investment fraud cases to slow.

To protect their retirement funds and life savings, authorities recommend investors arm themselves with the most potent prevention tool: education.

“Whether a cold-call, polished website, or e-mail solicitation, fraudsters will use every means at their disposal to convince investors to part with their money,” said SEC Director of Enforcement Robert Khuzami. “That is why investor education is so critical—in maintaining financial health as much as physical health, an ounce of prevention is worth a pound of cure.”

Investor education teaches investors which red flags to watch for, how to investigate an investment opportunity, and how to choose a legitimate investment advisor. It also teaches investors to avoid the most common approaches and tactics used by con artists to defraud unsuspecting victims.

Although the defendants in these federal prosecutions used a variety of tactics and schemes, they often took the same approach,guaranteeing high returns and, in many instances, providing falsified investment documents to victims,” wrote the Department. “As a result, those victims lost retirement savings, military survivor benefits, family death settlements, and money set aside for college tuition and mortgage payments. While the Justice Department has already obtained prison sentences for many of these scammers, including one sentence of up to 50 years, for many of the more [than] 100,000 victims the damage to their families is irreparable.

Representatives from the FBI, Securities and Exchange Commission (SEC), the Federal Trade Commission (FTC), the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN), the Commodity Futures Trading Commission, the Bankruptcy Trustees, the Financial Industry Regulatory Authority (FINRA), AARP, and the Better Business Bureau are holding investor fraud summits across the country to help consumers protect their hard-earned money from fraud. The summits are expected to be held in Connecticut, Tennessee, California, Colorado, Ohio, and Florida.

If you are unable to attend a summit, you can learn how to protect your hard-earned money from an ever-increasing number of fraudsters or learn how to recover funds lost in an investment scheme, take a look at our free e-book, “Five Signs of Investment Fraud … And What to Do if it’s Happened to You.” You also can find a number of investor education articlesin our investment fraud library.