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Articles Posted in Investment fraud

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In December 2022, the social media world was stunned to learn that federal prosecutors and the Securities and Exchange Commission (SEC) were filing civil and criminal charges against eight social media influencers. According to the complaints, the prosecutors and SEC accuse the influencers of using their social media visibility to manipulate stock prices—a $114 million fraud scheme. As we will discuss below, the case highlights the line between legitimate advice to investors and illegality, whether it's dispensed online for the public or in more traditional forms of investor communications. A Pump-And-Dump Reimagined Is Still A Pump-And-Dump In the 2022 case, the defendants allegedly ran a “pump and dump” scheme. According to the criminal indictment, the defendants purchased stocks at a low value, then posted positive but unfounded messages about them on social media. They disseminated false claims about how long they intended to hold onto the securities, the amount of due diligence they’d conducted relating to the securities’ values, and how much they believed the securities would increase in value. It worked. The stock prices rose. Then, the defendants secretly sold their shares, profiting at least $114 million from their manipulations.In December 2022, the social media world was stunned to learn that federal prosecutors and the Securities and Exchange Commission (SEC) were filing civil and criminal charges against eight social media influencers. According to the complaints, the prosecutors and SEC accuse the influencers of using their social media visibility to manipulate stock prices—a $114 million fraud scheme. As we will discuss below, the case highlights the line between legitimate advice to investors and illegality, whether it’s dispensed online for the public or in more traditional forms of investor communications. Continue reading

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In May 2022, the Securities and Exchange Commission (SEC) announced that it had filed an emergency action to freeze the assets of StraightPath Venture Partners and other defendants. The SEC alleged that the defendants were committing ongoing securities violations, having already racked up $410 million from 2,200 defrauded investors. The defendants are said to have been running a large network of unregistered broker-dealers who sold shares of a pre-initial public offering (IPO) that the defendants did not have to sell. Pre-IPO sales are ripe opportunities for fraudsters. By definition, the very premise is that investors are being sold shares before they’re available to the public. So those considering an investment may find it difficult, if not impossible, to find reliable information about the stock’s potential value. And the very pitch from fraudsters may include that the investors should not go asking anyone about their purchase because it’s a rare opportunity to get on the inside (perhaps even with a hint of insider trading info mixed in). In May 2022, the Securities and Exchange Commission (SEC) announced that it had filed an emergency action to freeze the assets of StraightPath Venture Partners and other defendants. The SEC alleged that the defendants were committing ongoing securities violations, having already racked up $410 million from 2,200 defrauded investors. The defendants are said to have been running a large network of unregistered broker-dealers who sold shares of a pre-initial public offering (pre-IPO) that the defendants did not have to sell. Continue reading

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If you hear the phrase “Ponzi scheme,” you may immediately think of Bernie Madoff’s $68 billion 20-year long fraud exposed in 2008. But there have been many high-profile Ponzi schemes since. Just in February 2022, film actor Zachary Horwitz was sentenced to 20 years in prison for his Hollywood-based Ponzi Scheme—a $650 million fraud. Then, later that month, the founder of cryptocurrency BitConnect was indicted for his role in a $2 billion Ponzi scheme. And just a couple of weeks later, a Utah business owner received a 19-year prison sentence for his Ponzi Scheme that defrauded 568 victims of $200 million. The phrase “Ponzi scheme” is sometimes thrown around to describe any fraud, but that’s not accurate. So let’s take a minute to explain what a Ponzi Scheme is.  Ponzi Schemes, Defined A Ponzi scheme is a specific type of fraud. The fraudster claims to invest the funds they receive; however, they’re actually taking money from new “investors” and giving it to the earlier “investors.”If you hear the phrase “Ponzi scheme,” you may immediately think of Bernie Madoff’s $68 billion 20-year long fraud exposed in 2008. But there have been many high-profile Ponzi schemes since. Just in February 2022, film actor Zachary Horwitz was sentenced to 20 years in prison for his Hollywood-based Ponzi Scheme—a $650 million fraud. Then, later that month, the founder of cryptocurrency BitConnect was indicted for his role in a $2 billion Ponzi scheme. And just a couple of weeks later, a Utah business owner received a 19-year prison sentence for his Ponzi Scheme that defrauded 568 victims of $200 million. Continue reading

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