FAQ: Investment Fraud

Here are some things I have learned representing victims of investment fraud.

Q: Can I get my money back?

A: Only if we can either (A) trace and locate your funds, or (B) identify a responsible party who has assets that we can collect against. In most cases, this is extraordinarily difficult. In most cases, the investment funds are laundered through overseas accounts in countries with banking privacy laws that are almost impenetrable. And in many cases, the funds are depleted long before the victim recognizes that a fraud has occurred.


Q: Won't the U.S. government help? Can't they trace and freeze assets anywhere in the world?

A: Unfortunately, you cannot count on government assistance. The ability to trace international banking transactions appears to be reserved for terrorism cases and not to be available to assist victims of investment fraud. In a recent case, the FBI told me that after the investors' funds left the U.S., they could not trace them further. In another case, the fraud was so massive, and involved so many shell corporations, that the SEC put a limit on the length of its investigation and wrapped it up without looking into my client's valid claims.


Q: What are some red flags and warning signs to watch out for?

A: If you receive a cold call pitching an investment, hang up. This one piece of advice, if followed, would avoid about 50% of the investment frauds I have seen. Only invest when YOU decide to, and only in transactions that YOU select on the advice of your local, SEC-regulated investment advisor. Pick someone at your local bank or a nationally-known investment company to handle your investments, and deal with them in person.

Never, ever, wire money into a "escrow" account unless you are a party to a valid, enforceable escrow agreement with the escrow agent. In my experience, transactions that require an investor to wire cash into a bank account described as an "escrow" account are invariably scam transactions. The accounts are NOT escrow accounts, and writing the words "escrow account" on your wire transfer instructions does not protect you. When you put a valid account number on a wire transaction, the recipient bank will never read the account name! Wired funds move based on the account number only.


Do not fool yourself into believing an investment is real merely because of information you locate on the internet. The fraud artists are sophisticated, well-funded, and making millions. They can, and do, create false websites. I have seen