Securities fraud is a category of white-collar crime that comes with serious consequences. Perpetrators of securities fraud provide false information in order to manipulate financial markets in a way that provides financial benefit or gain.
The following list provides the five most common types of securities fraud. To aid your understanding, Dallas Criminal Attorneys Broden and Mickelsen provide a brief description of each.
- High Yield Investment Fraud: Characterized as investments that seem too good to be true, and actually are. These often unsolicited investment offers typically promise a high return with minimal or no risk
- Ponzi Schemes: One of the most recognized types of securities fraud, Ponzi schemes work on a structure that collects money from newly acquired victims to pay a high rate of return to earlier investors. In short, there is no actual investment but rather all the returns come through new investors only.
- Advanced Fee Schemes: Fees are collected from victims, with the promise that their small investment will produce a more sizable gain. The fee might be described as processing fees, supply fees, or program entrance fees, but in reality, the perpetrator never follows through on their promise.
- Broker Embezzlement or Misconduct: Investment brokers may act inappropriately by adding on unexplained fees, or by participating in unauthorized trades. Some investment brokers might also engage in embezzling funds from their clients.
- Pyramid Schemes: Pyramid schemes are business models in which top tier members recruit new members, with those members recruiting new additions in return. Each person who joins pays an upfront cost, which goes directly up the chain. Pyramid schemes, not to be confused with multi-level marketing operations, are illegal in the United States.
Securities fraud is considered a felony in Texas. The degree of felony offense charged depends on the monetary amount associated with the crime.
- If the offense involves up to $10,000, it will be charged as a third-degree felony
- Amounts between $10,000 and $100,000 are charged as a second-degree felony
- Any amount that exceeds the $100,000 threshold will be charged as a first-degree felony in Texas
Each of these felony classifications carries the potential for time served in prison, along with fines and legal fees.
If you’ve been accused of involvement with securities fraud, contacting an experienced white collar fraud attorney first, before you speak to anyone else, is the most important step you can take to protect your future. The penalties for securities fraud are severe, with the average term of incarceration for a securities fraud conviction being 54 months. Don’t risk your future, contact a securities fraud attorney in Dallas today.
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