Should the victim report the investment fraud? In general, filing a report is recommended. Complain online investment fraud serves the purpose of punishing investment scammers, and that should be the case. However, filing a criminal complaint does not guarantee that the defrauded investor will get their money back!
To recover the money, the specialized attorney in investment fraud must follow the money trail. As it is commonly said, money is never really gone, it's just somewhere else. Today, we can add that with the right technical tools, the money trail can be traced, even if it was deposited through a cryptocurrency exchange using Bitcoin.
RESCH Rechtsanwälte cooperate with Chainalysis. Based in New York, Chainalysis is considered a global leader in the analysis and tracking of Bitcoin & Co. in the blockchain. The results achieved using this technology are astonishing even to experts.
What is the purpose of reporting investment fraud?
Many investors feel overwhelmed when they want to file a report with the police. It is not enough to simply claim to be a victim of investment fraud. They should also be able to present a coherent explanation of what exactly happened and why it qualifies as investment fraud. It may sound simple, but with over three decades of experience in investment fraud, we know that many investors do not fully understand the underlying aspects of online investment fraud. They only realize that the broker is not paying them their money, but that alone does not constitute investment fraud.
What is an investment scam?
What is the definition of investment fraud? In simplified terms, investment fraud occurs under § 283 of the German Penal Code (StGB) when the investment fraudster deceives the victim to unlawfully enrich themselves and convinces the victim to transfer their money to the investment fraudster. But how does the victim know that they were intentionally deceived and it was not just a risky business in which the risk materialized? How can the investor present sufficient evidence in their criminal complaint if they are not clear about what happened?
Is it even investment fraud?
If an investor suspect they have been defrauded, they should consult an attorney specializing in investment fraud who also has extensive experience. Initially, the investor's attorney will assess whether there is indeed investment fraud within the meaning of § 263 of the German Penal Code (StGB).
Generally no investment fraud in Cyprus cases
The Cypriot financial supervisory authority CySEC repeatedly licenses online trading platforms that often act questionably and unethically but are allowed to offer their services throughout the EU, including the German-speaking region. However, national consumer protection regulations are often not followed, resulting in civil claims for damages for the investor. Therefore, filing a criminal complaint for investment fraud in such cases does not make sense. Moreover, it is regularly difficult to prove investment fraud in Cyprus cases.
Report against online trading fraud platforms?
The purely criminal online trading platforms with their fraudulent brokers must be distinguished from the licensed, real existing, yet often unreliable trading platforms in Cyprus. You enter with 250 euros, and then you see the profits grow and grow. The problems with the broker only start when they refuse to pay out and instead demand more and more money.
Without a doubt, all of this constitutes investment fraud under Section 263 of the Criminal Code. However, trading victims often experience disappointment when they report investment fraud to the police. Their criminal complaint is against online platforms that hide their identity behind anonymization services, with call centers located abroad and all the names of the brokers being false. Investigations are regularly closed unless a specialized attorney with expertise in trading conducts their investigations, especially regarding the whereabouts of the money, to complement the factual situation.
Complain about pyramid scheme?
Pyramid schemes have a significant share in the online investment fraud scheme. They are usually structured as multi-level marketing or referral marketing. Investors who are falsely convinced by the product are encouraged by commissions to recommend the financial entry to friends, relatives, and acquaintances. Only much later do they realize that it was all a fraud from the beginning? The payouts are made from the fresh deposits of newly recruited members of the pyramid scheme. Eventually, every pyramid scheme collapses - it is inevitable!
The victims of the pyramid scheme often find it difficult to take action against their referrers. There are even more inhibitions to file a criminal complaint, especially since mere participation in a pyramid scheme is illegal. This is all very complex and nearly impossible for a layperson to understand. It is crucial to involve an attorney specializing in investment fraud. In addition to the obvious evidence preservation measures, they should be able to determine the flow of money.
Criminal complaint due to false stocks and fixed-term investments
Another fraud scheme used by investment scammers involves attractive offers for fixed-term investments or stocks of reputable companies, or an upcoming IPO. But everything is deceit and deception. There is no fixed-term deposit or stocks.
A criminal complaint only makes sense in this case if the specific pattern of fraud can be attributed to a group of perpetrators. Otherwise, the case is regularly closed because the perpetrators operate under false names and cannot be identified.
In this situation as well, the investor should engage an attorney who, with their years of experience and investigation tools, can identify the group of perpetrators and trace the money. These investigation results must be included in the criminal complaint to optimize the chances of punishing the investment fraudsters and compensating the investors.
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