NCJ Number
188587
Journal
FBI Law Enforcement Bulletin Volume: 70 Issue: 5 Dated: May 2001 Pages: 13-17
Date Published
May 2001
Length
5 pages
Annotation
This article describes how fraudulent investment schemes typically occur, identifies some of the difficulties in investigating such schemes, and proposes innovative investigative techniques that can lead to successful prosecutions.
Abstract
A typical investment fraud is a classic Ponzi scheme in which money paid to old investors is, in reality, investment principal from the new investors; no legitimate investment ever occurs. By the time the matter comes to the attention of law enforcement, the money has passed through several hands and, often, through several States or countries. Several problems arise in investigating this type of scam. First, investigators have difficulty proving that anyone involved acted with intent to defraud, especially promoters of the scheme. Another problem involves the level of complexity these types of schemes present. Investigators can address these challenges by using innovative investigative techniques and following certain steps in the investigation. First, investigators should interview promoters, obtain a history of their past involvement with these schemes, and warn them that these types of investments are fraudulent. Additionally, investigators should obtain evidence of previous scams through interviews, search warrants, and bank records. Investigators should search for evidence that the promoters knew that the program would not work. Second, law enforcement should interview the victims. Officers should obtain evidence of lulling statements made to victims, as well as declarations made by promoters about their past success with these programs. Most important, prior to beginning any investigation, the investigators should contact the prosecutor, explain the case and strategy, and keep the prosecutor informed throughout the investigation. Changes for a successful prosecution of the case increase if a prosecutor works on the case early in the investigation. 5 notes