According to the Financial Times, the first half of 2019 saw more than double the number of investment frauds cases than in 2018. According to data from the City of London Police’s National Fraud Intelligence Bureau, British investors lost £43m to investment fraudsters in the first six months of this year.
What do Investment Fraudsters Do?
Put simply, investment fraudsters deceive potential investors into making purchases based on false information. Companies may lie to potential investors, saying they are making a larger profit than they really are in order to secure investment by falsifying audits and other company statements.
However, investment frauds cases can be conducted in a variety of ways and we go into more depth regarding the biggest investment frauds in a recent blog post. These types of investment fraud cases include Ponzi and pyramid schemes, pump and dump, offshore scams, boiler room scams, and advance fee fraud.
Recent Investment Frauds
While the more traditional investment frauds cases mentioned above are still at the forefront of the financial crime landscape, new types of investment frauds cases are on the rise.
For example, one of the more infamous recent investment frauds has been an international talking point, especially since the mastermind behind it has gone missing. This particular case combines Ponzi fraud with a cryptocurrency scam and has fleeced a huge number of investors across the globe.
It began with a cryptocurrency called OneCoin which was very convincingly and charismatically marketed as Bitcoin’s biggest rival, promising investors huge returns. The scam was so convincing that British people invested almost €30m on OneCoin in the first six months of 2016. In reality, OneCoin wasn’t an established cryptocurrency and lacked credibility and accountability. Additionally, it wasn’t even ready to be traded. Any increase in value seen by investors was simply manufactured inhouse. Not only was the cryptocurrency making money from unwitting investors, but it was also being operated as a pyramid scheme with the founder selling OneCoin to members of multi-level marketing schemes, who would then profit by convincing others to purchase it. You can read more about this particular case in a recent BBC article which explores the case in depth. The rise of cryptocurrency and the success of Bitcoin will inevitably create more opportunities for investment fraudsters to target potential investors. If you are concerned that you a part of a cryptocurrency investment scam, please contact our cryptocurrency lawyer, Jeremy Barnett.
How Do Investment Frauds Cases Differ from other Forms of Bank Fraud?
While all types of investment frauds cases and bank fraud are initiated by fraudsters with the same end goal in mind – to dishonestly receive someone else’s money – the modus operandi of the fraud vary. For example, banking and insurance fraud can often operate on the basis of phishing and identity fraud in order to undertake covert theft. The perpetrator can often achieve this through hacking, impersonation, email or phone call and doesn’t tend to engage in long term pursuing of their victims. On the other hand, some investment frauds cases are carried out by acting as a reliable party and investing time and contact into manipulating individuals into handing over funds. If you aren’t sure if you have been involved in an instance of bank fraud or are part of a group of investment fraudsters, please read our blog post on the four key types of bank fraud and familiarise yourself with how the bank fraud investigation process works.