The Types of Securities and Commodities Fraud Schemes
Securities are stocks, bonds, certificates of interest, or any interest in an instrument that uses the money of others in the hope or promise of profits. Any instrument that falls within the definition of a security is governed by federal regulations. Commodities are raw materials that can be bought, sold, and contracted for, such as gold or coffee.
Securities and Commodities Fraud
Securities or commodities fraud is committed when a person knowingly defrauds, or attempts to defraud, an investor in connection with any security or commodity, or an option on a security or commodity. 18. U.S. Code § 1348. These frauds often include the use of false pretenses or false promises to obtain money in connection with the purchase of a security or commodity.
Punishment for violating the federal Securities and Commodities Fraud statute may include a fine, imprisonment for not more than 25 years, or both.
Types of Securities and Commodities Fraud Schemes
Investment fraud is one of the most prevalent types of security and commodities fraud schemes. Investment fraud schemes involve the illegal sale or purported sale of financial instruments. Such a scheme may offer a low or no-risk investment, guarantee returns, sell unregistered securities, or be laden with complex strategies.
Examples of Investment fraud schemes include Ponzi schemes, pyramid schemes, prime bank investment fraud, and advance fee fraud. Investment fraud is often carried out by an individual in a trusted position, like a community leader, coach, or professional investment advisors.
Other types of prevalent securities and commodities frauds are:
- Promissory note fraud: when an investor is enticed into purchasing a promissory note by the promise of a high return and low level of risk; however, the information given on the note or the company is false or misleading and the investment is not legitimate.
- Broker embezzlement: when a broker takes illicit and unauthorized actions to steal money directly from their clients.
- Market manipulation or “pump and dump” schemes: when investors are induced into purchasing shares of a stock through deceptive sales practices, which increases the price of the targeted security, and then the stock is rapidly sold off by the fraud perpetrators for a high rate of return that was artificially inflated by the scam.
Defending Against Criminal Charges
If you are facing charges of securities or commodities fraud, you need an aggressive and experienced white collar criminal defense attorney on your side. Ashley D. Adams is a former fraud prosecutor with the United States Attorney’s Office. She understands how prosecutors operate. Given her prior work, she also has a longstanding and positive relationship with the U.S. Attorney’s Office, the Attorney General’s Office, and the Department of Justice. Put Ashley D. Adam’s experience to work for you.
The attorneys at Ashley D. Adams, PLC handle federal criminal cases throughout the United States, including Arizona, Oklahoma, Utah, and California.