FRAUDULENT INVESTMENT SCHEMES; DUTIES OF FINANCIAL AND INVESTMENT ADVISORS; VENTURE CAPITAL INVESTMENT FRAUD; ILLEGAL PRIVATE PLACEMENT OFFERINGS; REAL ESTATE TRUST DEEDS AND INVESTMENTS
Fraudulent Investment Schemes
All persons who act as financial or investment advisors, or who seek to raise capital from members of the public, have a high duty of due care with respect to their clients and prospective investors. They are required by law to provide honest and complete information; and to render only appropriate investment advice to the persons with whom they deal. California is replete with illegal and fraudulent investment schemes. These include fraudulent real estate development and real estate trust deed sales, illegal venture capital loans and stock sales, sales of unregistered and non-exempt securities, illegal secondary offerings of securities, private placement offerings to unqualified investors or otherwise in violation of the securities laws, and fraudulent or misleading prospectuses.
Securities Registration Requirement
A security has been generally defined as any bond, stock, investment contract, evidence of indebtedness, or other investment instrument which is hoped to return money to the investor for work performed by another. Under the Securities Act of 1933, all securities must be registered with the Securities and Exchange Commission (SEC), or be officially exempt from the registration requirement. Investors often lose money when they purchase unregistered securities, and claims of securities misrepresentation and fraud often arise out of these losses.
Venture Capital Investments
Start up businesses seek to raise capital through a variety of means: selling to friends, family, social acquaintances, and strangers contacted by cold calls. These sales are frequently made to unqualified investors, or are made without full and complete disclosure of all of the material facts, and all of the potential risks of the investment being sold. In a high percentage of cases, the investor does not understand the nature of the investment purchased, and has relied primarily upon the recommendation of a friend, advisor, or seller who has vouched for the investment's merits and security. Some of these businesses are legitimate. Others are a mere sham and part of a scheme to defraud the investors.
Real Estate Trust Deeds and Investments
Sometimes the business seeking to raise capital is a real estate development enterprise; or a means of providing capital to a real estate owner, by so-called "hard money loans," or "bridge loans." Investors may be provided with promissory notes and/or trust deeds as evidence of their investments. These investments are illegal when recommended or sold to unqualified investors, or when all of the true facts and risks are not disclosed.
If you or a close acquaintance is a victim of one of these illegal investment selling practices, contact the securities fraud and misrepresentation firm of Virginia H. Gaburo & Associates for a thorough review of your losses and options.
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