How does an investment or business fraud actually happen? How is it discovered? Sometimes, in fact many times, the fraud is remarkably simple and direct.
Investment and business frauds can happen to almost any person or company. As a business attorney, I have seen it in numerous industries, such as Oil & Gas, Real Estate, Network Marketing, Online Businesses, Construction projects, and Corporate/Partnership transactions.
To illustrate this simplicity, I want to share a recent settlement announcement of an investment fraud claim.
A Financial Advisor targeting wealthy individuals was charged with stealing over $2 Million from clients to invest in purported movie projects. When the Financial Advisor was unable to raise the entire amount needed, he allegedly took funds from other client accounts over which he had control and used the money to finance the projects. One of the clients that rejected the sales pitch to invest had over $500,000 removed from their account through the alleged forging of documents to make it appear as though a transfer had been authorized. After the client discovered the unauthorized investment, he demanded his money back, and was made whole in Ponzi-like fashion by the Financial Advisor taking money from the account of another wealthy client. The full article detailing the claim can be found here.
There is nothing special or unique about this fraud claim. It is ridiculously simple – yet strikingly effective. Texas courts are routinely confronted with legal disputes involving similar investment and business frauds. Sometimes it is not movie projects but rather real estate schemes. Sometimes the victim investors are professional athletes, doctors, corporate executive or independent business owners. Sometimes signatures are forged, other times invoices are doctored.
Yes, there exist elaborate frauds built upon creative and painstaking deception. But frequently the fraud is direct and unsophisticated. As an Investor, of any kind, one must always be diligent and know that should a fraud ever occur there are laws and authority in Texas state and federal courts to enforce recovery.