There are numerous types of investment frauds that may include, but are not limited to: ponzi schemes, pyramid schemes, corporate fraud, corporate misconduct, dummy corporations, internet fraud, insider trading, microcap fraud, accountant fraud, boiler room schemes, mutual fund fraud, front running and short selling. This kind of fraud is also known by other names, such as securities fraud or stock fraud, and comes under the general category of white collar crime.
Investment fraud is when someone entices a buyer/investor to buy something based upon false information. Typically, this violation of securities law ends up with the duped investor losing money. Put another way, the con artist lies to a mark about the value of a particular investment, and the information given is not true.
Investment fraud is a wide area that may also encompass theft from investors, misstatements or misleading information published in a public company’s financial report, stock manipulation, embezzlement, and lying to corporate auditors. There are some estimates out there that show securities fraud may total at least $40 billion a year.
The advent of the Internet has made investment fraud an easy crime to commit, but also an easy avenue to track offenders. Investment frauds have become much more complex over time, and many con artists are starting to expand their horizons to other countries. Many victims of this form of fraud are not able to recover any money from the fraudster.