Investment and Banking Scams continued

Common Characteristics of Investment Scams

These are common characteristics of investment scams:

  • There is little in writing.
  • The scheme is clothed in confidentiality (paradoxically the exception to the "little in writing" rule is that there is often a confidentiality agreement that investors, and sometimes lawyers, are asked to sign).
  • The investment is baffling, but uses credible investment terms and concepts that people (including lawyers) think they should understand.
  • Very little concrete detail is provided.
  • The majority of the income seems to be generated from the number of people recruited into the scheme and not from the product or investment opportunity itself.
  • The profits offered are extremely high (too good to be true).
  • The typical investor is unsophisticated.

Possible Features of the Relationship with the Lawyer

Here are some examples of the fraudster's relationship with you:

  • You are "promised" big money.
  • Any money that is actually paid is often for some small, sometimes unconnected, legal service such as the incorporation of a company.
  • Very little of what you are being asked to do amounts to the practice of law; often the only real service requested is access to your trust account.
  • You may be offered a percentage of every dollar that passes through your trust account, or a finder's fee for each new investor that you bring through the door or that you "sign up" (e.g., to whom you give independent legal advice or certify for Land Title Act purposes).
  • You may be induced to release money, often in breach of trust conditions that investors have placed on it, with assurances that the investment is about to pay-off and you are the only one holding things up.
  • Except for the money brought in by the individual investors, you do not know the real source of other funds used in the project.
  • No financial institution that you have ever heard of is involved; or if you have heard of the institution, you are not given information on how to initiate contact with anyone in a position of authority, and others control all contacts.
  • You don't really understand how the investment works.