Investment fraud is designed to be hard to distinguish from genuine opportunities and are disguised in a multitude of different ways.
The scam will have a combination of genuine features mixed in. This is done to throw you off the scent of a scam at first glance.
Stock market fraud and Ponzi schemes are known to many investors. There is a ton of useful information to help determine if it is a scam. However, alternative investment frauds are not as known. Therefore, the schemer has confidence in the fraud, making the investor believe in the opportunity.
These Red Flags are a Sign of Trouble
Website– The website will showcase how much money other investors have made because of their firm or strategy. One phrase to be aware of is “guaranteed returns of (certain percentage) or more.” No investment is ever that definite. The more you are guaranteed, the more it should make you examine. It most likely means it is not a legit opportunity and maybe a fraud.
Call to Action – The call to action will require extreme quickness so that you won’t miss out on the deal. This demand to invest immediately, or intimidate you into making a choice, is a red flag. Legitimate investments will still be good tomorrow. The extra time will let you research or find the help to authenticate the deal.
How You Learned of the Investment – How were you contacted by the schemer? Did you receive a call or email? Cold calls, chain emails, and false promises on the internet is how a schemer finds investors to lure into their web of deceit.
Liquidation Fees / Problems – You learn that you cannot liquidate investments that you thought you could sell in addition to finding out that there is an unexpected fee or surrender charge for selling.
Independent Third Party – Your investment account should be held with an independent third-party custodian that is regulated and monitored. Avoid giving possession of invested capital to the investment manager.
Exclusive Investment Organizations – Be cautious of invitations to join an elite investment organization and become part of a select group of investors. Exclusive is the red flag, as it usually means investment fraud.
Investment Fraud Prevention Solutions
When an investor has been scammed once before, they have been marked as easy prey and will likely be a target again for another schemer or the original schemer may pose as the company that will help get your money back.
Alternative Investments (non-public) can offer incredible capital gains that beat most modes of traditional markets. Which makes it a prime target for con artists to study and create scams to lure people in.
An alternative investor must do their due diligence in protecting themselves and being informed. There will always be money lost in the world of investing, but it would be due to market fluctuation or human error, not because of investment fraud.
However, if you want to have complete confidence in your investments, then hiring an investment research agency is the answer. They are a team of specialists that can verify facts and run reports that will give you all of the information. This way, you will feel confident and not be taken by investment fraud.
