Investment fraud is on the rise. CBC reported that over $300 million was stolen in 2023 using this type of fraud. The actual number is much higher, considering only 5-10% of fraud victims file reports.
One way people are deceived in investment fraud is for the fraudster to pay them small amounts of money over a period of time. Initially, if the victim asks about the higher rate of return they were promised, the fraudster may tell them they need to invest more or that the returns are coming. It is when the fraudster feels the pressure of being discovered or when the victims stop giving money that the fraudster disappears and moves on. It is typically at this point that the victim realizes that they have been defrauded.
The victim was provided with a false sense of security about the investment. They cannot reach the company or individual they are dealing with, and their money is gone. Unfortunately, at this point, many believe they need to absorb the loss; after all, they gave the fraudster the money. It is common for victims to question their judgment or experience feelings of shame at falling prey to fraud. They may think that they are at fault.
It doesn’t matter at what stage you report fraud; it matters that you report it.
Understanding the difference between investment fraud and a bad investment is crucial. The key distinction lies in the intent to deceive. When a company or individual deliberately misrepresents information or manipulates circumstances to exploit someone and cause them economic loss, it is fraud.
Securities commissions nationwide have resources to help victims of investment fraud. These organizations have tip lines and complaint forms that can be submitted. Securities Commissions have the authority to investigate the allegations and sanction the seller. The commissions can also press criminal charges.
Kathleen O’Donoghue, CFE
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