What are securities and commodities fraud?

The terms securities and commodities fraud are general terms that include a wide variety of different potential crimes, but can include crimes relating to investments, stocks, and other tradable financial assets. 

Stealing from investors, embezzlement, intentionally misrepresenting a company’s financials to investors or to financial auditors, insider trading, or general actions that lead to an investor making a sale or a purchase based on false information are just some of the crimes that fall under the umbrella of securities and commodities fraud. 

What are some examples of securities and commodities fraud?

• Commodities fraud — Commodities, goods, raw materials, derivatives, and other items are sold or traded on what’s called an exchange, which is essentially the marketplace for these specific commodities. Exchanges can either be actual physical marketplaces, or they can be digital platforms designed for buying, selling, and trading to take place. Common commodities fraud activity includes the falsification of investments designed to draw in other investors, or the participation of activities that manipulate the market for their own financial gain.
• Investment fraud — Investment fraud is an incredibly common form of securities and commodities fraud, and includes a wide range of schemes. Ponzi and pyramid schemes are among the most prevalent types of investment fraud. Ponzi schemes typically use the money garnered from new investors to pay older investors, creating the illusion of profitability, eventually falling apart once no new investments are coming in and the conspirators have made off with their profit. Pyramid schemes are similar in nature, but are distinct in that people at higher levels in the pyramid will pay lower levels a commission for bringing new recruits into the organization. Once the market is saturated, the lower levels can no longer bring in new recruits and the scheme falls apart. Multi-level marketing programs are also similar to pyramid schemes, but will include a good or service for sale. 
• Market manipulation — Market manipulation, or pump and dump, schemes are designed to artificially inflate the value of a stock, attract investors through high pressure sales tactics, and then dump your shares in order to create a higher financial gain, leaving unwitting victims in their wake. 
• Broker embezzlement — This involves direct theft of a client by their broker, where they make unauthorized transactions in the client’s name for their own personal financial gain. Document forgery, illegal transfer of funds, and other crimes often can occur in this type of embezzlement scheme. 
• Dummy corporations — This crime is designed to fool investors into believing that they’re investing in reputable companies by creating fake companies that hold similar names to established, trusted entities. Fake shares are offered for investment, with the proceeds stolen by unwitting victims. 

As technology becomes more diverse and sophisticated, so do the opportunities for people to take advantage of these systems. Of course, there are a large number of crimes that can be categorized as securities and commodities fraud that we haven’t discussed today, though these are among the most common that investigators are tracking.  

I’ve been accused of a securities and commodities crime — what do I do?

If you or someone that you know has been accused of participating in a securities and commodities fraud-related crime, then the time to secure representation is now. 

Investigators and prosecutors are typically intent on making and shutting their cases as quickly as possible, leaving the accused often intimidated, in fear for their freedom, and with very little guidance on what they can and should do in such a high-pressure situation. 

We encourage you to be polite to the authorities while remaining firm in your request for speaking with your attorney. It is your constitutional right to have legal counsel assist you in your defense. 

Remember, being polite does not include your making statements to the police or to prosecutors without the express guidance and permission of your attorney. Sharing information without your attorney’s guidance, as Miranda warning states, can and will be used against you in a court of law. 

Who you shouldn’t hesitate to cooperate with is your defense attorney. Our goal is to assess the prosecution’s case and create a defense narrative that casts a shadow of a reasonable doubt across their assertions. They’re often required to prove intent, and that a person has knowingly and intentionally committed a crime, which can be very difficult to demonstrate. 

This is why it’s so important to work closely with us as your defense counsel so that we can gather all of the pertinent information to your case, discuss options, and develop a defense strategy that pokes holes in the prosecution’s case. 

We want to be perfectly clear here: You’ll get the best defense possible by being completely transparent with us. Don’t hide information. The prosecution likely knows much more than you know they do, and when it comes to creating a legal defense, surprises are not good! You have attorney-client privilege and you can confide in us. That’s one of the things that we’re here for. 

Need assistance with a securities and commodities fraud-related issue? The Law Offices of Robert J. DeGroot can help! We have nearly a half-century’s worth of experience in helping the citizens of New Jersey in protecting their constitutional rights. Don’t delay — contact us today for your confidential consultation!