Investment fraud - What is the definition?

By the Cambridge Dictionary, the definition of investment fraud is "the illegal activity of providing false information to someone so that they will invest in something". What criminal element must be met to be considered investment fraud? Some investors already feel cheated just because they got a bad deal. That's not enough to meet the definition of investment fraud. Investment fraud is colloquially understood to be any form of fraud in which the investor is deceived and intentionally deprived of his or her savings when investing in a capital asset for enrichment by the investment fraudsters. Authorities such as the FCA (Financial Conduct Authority in the UK) or The SCA (The U.S. Securities and Exchange Commission) are investigating allegations of online investment fraud.




Investment fraud definition: Extension in the case of capital investment fraud
It is no longer required that an investor be cheated or make a mistake, nor that a financial loss be incurred as a result of a mistake. It is sufficient if incorrect information is given on a flyer or in a prospectus or important facts are concealed if these are suitable for influencing the investor's decision. This act is already completed when the investment fraudster makes false statements. This is a rather abstract endangering offense.


Investment fraud definition: Lured into the trap!
The normal defrauded investor has mostly been lured into the trap via dubious ads on the Internet. Especially notorious is the abuse of the television show "In the lion's den". Here it is claimed that the show was taken off the net because it revealed the big secret of how anyone with a brilliant idea could become a millionaire within days. This secret must not be made public under any circumstances, otherwise, everyone would want to become rich.


Investment fraud definition: All lies, all theater
It is always the same scheme of investment fraud. The big theater is played out with the world stock markets as the backdrop and the brokers as the heroes who selflessly want to flush millions into the pockets of investors. The deceived investor can watch on the Wallet how his stake doubles and triples thanks to the smart advice of his brokers. Everything looks terrific on the Wallet, so he can easily be convinced by the investment scammers to invest even more money and make big deals again. Doubts will come to the investor only when he demands the payout of all or a significant part of his capital. After an initial promise, there is then hesitation and formal obstacles are set up. Popular is also the announcement that on the profit still 10 or 20% taxes must be paid. Here many investors then wake up and realize that they have fallen for investment fraud. Some, almost drunk from the enormous profit sums on their account, pay also still 20% "taxes" on evenly this fantasy amount, only to notice that they do not get their money nevertheless. At this point at the latest, the investor knows that he has fallen victim to investment fraud.


Investment fraud definition: How do you recognize investment fraudsters?
The definition of investment fraud, also crucially depends on the investment fraudster and his presentation. The websites of investment scammers are usually quite well done. But even a layman can see why the utmost caution should be exercised with certain providers in this cyber capital market. He should only take a closer look at the websites of the investment scammers. On the web page, it must be immediately recognizable where the enterprise has its seat and is registered. In most cases, he will already notice here that such information is not found on the website of investment fraudsters.


Investment fraud definition: Already the web page betrays the investment fraudsters
The texts on the website are regularly a prime example of banality. There are no specific details and also no reference to the players. Common sense can tell you that such grandiose brokers would be world famous and would proclaim their worldwide fame in countless pictures in all media worldwide. But none of this can be found on the websites. Recognizably, the pictures are only stock photos, i.e. photos that you can pick out on the Internet and which immediately stand out as artificial representations of beautiful people with feigned diversity. They are not the real actors pretending to move millions on the stock exchanges.


Investment fraud definition: Warning lists of the European supervisory authorities
It is also helpful to take a look at the relevant stock exchange watchdogs of the relevant banking and stock exchange supervisory authorities. After all, the investment fraudsters make investors believe that they are based in the hotspots of stock exchange trading, such as solid Switzerland, vital Hong Kong, or, for example, Frankfurt, London, or New York. Probably every supervisory authority puts its warning lists on the Internet, on which many cases of investment fraud are recorded.


Investment fraud definition: Why does the investor often find nothing on Google?
Many investors look at Google to see if, by their definition, a warning about the company can be found on Google. However, investors often experience that they do not come across any references during their searches. The reason is simple - it's because new websites are being added all the time. Often, names of reputable existing companies are also used with a subtle variation. A clone is created. This event gives the investor a sense of security that such a reputable company will not harm him.


Investment fraud definition: Experts look behind the scenes
The lawyer familiar with investment fraud knows, of course, that there are numerous other ways to look behind the scenes of investment fraudsters. These tools make it possible not only for government investigators but also for attorneys specializing in capital investment fraud, to follow the trail of both the perpetrators and the money.


Investment fraud definition: What to do in case of investment fraud?
In their first reaction, many defrauded investors run to the police and file a criminal complaint. This is not very promising for two reasons. First, the police authorities are often overwhelmed and discontinue the investigation after a short time. Secondly, the purpose of criminal prosecution is not to get the investor his money back, but to punish the perpetrators. Every investor knows this. However, very few make themselves aware of this at this early stage, when many are virtually in a state of shock. It is much more promising if the defrauded investor finds a lawyer specializing in capital investment fraud who can bundle the proceedings and combine them with criminal prosecution, supervisory law, and money laundering regulations. The procedures must be bundled and ideally investigated and submitted with all evidence to the relevant state criminal investigation office. In parallel, the supervisory authority is informed as well as the involved financial institution is confronted with the accusation of money laundering.


Investment fraud definition: What help is available?
The investor protection law firm Resch Rechtsanwälte has been dedicated to this definition of investment fraud for three decades.  Of course, the aspects of investment fraud have changed again and again. With an international network of experts, it is possible to track investment fraudsters around the globe. Most of the time, however, you end up back in your home country of Europe, where countless groups and gangs of investment fraudsters have their sights set on the German-speaking target group in particular. The Internet and investment fraudsters know no borders, but there are overarching European legal norms that make the work easier for lawyers specializing in investment fraud.


Resch Rechtsanwälte - Experience in investor protection since 1986
If you would like to know more about the topic, call +49 30 885 97 70 or fill out the contact form. You will receive a free assessment of your case.