Eight Common Investment Scams

[HaroldWallace]

In the case of a private placement program scam, you are usually required to pay funds for an investment that is questionable or one that may not exist at all. In most cases you'll either lose a portion or all of your money. Here are some typical scams.

8 Popular investment scams

Plan with advance fee

A scheme known as an advance fee is where the victim is enticed to pay money upfront to get promises of more. The issue is that the scammer will then take the money and the victim won't ever hear from them again.

Scammers typically target investors who have suffered losses in a risky investment. They'll reach out to the investor and offer to help recover the losses. They may offer to purchase or trade the investment in exchange for some profit, but the investor must first deposit, pay taxes, and pay a "refundable fee". If the investor pays more money, they'll forfeit that, too.

Boiler room scam

A common method of committing an private placement program scam and to build a boiler room. They might also send you to their website as a way to convince you that their company is legitimate. To ensure that their business appears legitimate, they might establish a toll free number as well as an address.

But, the business does not exist. The website has fake information and the office itself is only a temporary box or post office. Once you realize that you've lost money, the scammer will have shut down his business and will move on to another scam.

Scammer using exempt securities

A prospectus must be filed with the securities regulators when a business wishes to sell securities. Exempt securities are an exception. They are able to be offered without a prospectus, however they're restricted to accredited investors or certain other conditions.

On their own exempt securities aren't frauds on their own. Scammers can attempt to convince that exempt securities aren't scams. Emails or calls that do not come from an informational tip on the business "going public" is a red flag. You may be told that the opportunity is limited to wealthy people, but an exception will be made for you. There is a chance that you will be required to sign documents that incorrectly shows your earnings as well as your net worth. If you're required to lie about how much cash you earn it is a sign of someone who breaks the rules.

Fraud in the Forex market

Foreign exchange (forex market) is the largest and most liquid global financial market. Investors trade currencies in order to make money on changes in exchange rates. Trading in foreign currencies can be risky. Advertising for Forex offers ease of access to the foreign exchange market typically through courses or through software. But foreign exchange trading is controlled by big, well-resourced international banks, with highly-trained personnel, access to cutting edge technology and large trading accounts. These professionals are extremely hard to beat. Forex trading can be extremely risky.

Certain strategies for trading in forex could also be illegal or fraudulent. Forex trading services can be operated online from other countries, so unregulated companies may not follow the rules. Your money might not be invested as claimed You could be asked to wire money into an offshore account prior to you begin trading, where the money will be inaccessible. In any of these circumstances you're likely to be unable to recover a portion or all of your money.

Offshore trading fraud

If you send your money overseas to another country the scam promises massive profits. In most cases, the goal is to minimize or eliminate taxes. Beware of tax avoidance strategies. There is a chance that you will end up owing money to the government in tax restitution, interest, and penalties.

There are other dangers associated with offshore investing, too. If you transfer money to a different country and something happens to it, you will not necessarily be able to take your case to a civil court in Canada. Sometimes , it's not possible to retrieve your money.

Pension fraud

This scam targets people who have retirement savings in an LIRA, also known as a Locked In Retirement Account (LIRA). In the majority of cases it is not possible to withdraw funds from an LIRA until you've reached a certain point in your life that is usually 55 or more. You will likely be taxed on the money that you withdraw.

The investment frauds is usually advertised in ads as a special "RRSP loan" which allows you to get around the tax laws and tap into the funds you have locked in. In order to get the loan you must sell the investments that you own within your LIRA and use the money to buy shares of a startup company that the promoter is selling. The promoter will loan you 60% to 70% of the money you have invested. The remainder will be kept as a charge.

Investors who enter the scheme in the beginning may earn very high returns in the shortest time from what they think are interest cheques. Investors are often so happy that they choose to invest more or even recruit new investors from their acquaintances.

The investment isn't actual. The investors receive the "interest cheques", which are cash they've obtained from other investors. Eventually, new people stop taking part in the scheme. There's no more money, and there's no method to get it back. The promoters will disappear with all the cash.

Pump and dump scam

The scammers make use of lists of potential investors to sell you a good deal on stock that is cheap. You may not be aware that the person or company contacting you also owns a large amount of the stock and may not represent a legitimate company. As investors purchase shares, the value of the stock increases dramatically. The scammer will sell their shares once the price reaches its peak and the value decreases. The stock is worthless.