There are many different types of white-collar crime, including various types of fraud. Investment fraud is one of the most common white-collar crimes prosecuted in the United States. Individuals who want to secure investment from outside parties or maximize the return on their own investments sometimes engage in fraudulent behavior for financial gain.
When allegedly fraudulent conduct results in financial losses for other people, state agencies or federal regulatory authorities may pursue criminal charges against an individual. Allegations of investment fraud can arise from a variety of different situations. The internet has seen an increase in pump-and-dump schemes that may result in investment fraud charges.
What type of behavior might lead to pump-and-dump fraud allegations?
Generating online hype can constitute fraud
Most people don’t make snap judgments about potential investments. They may try to do a degree of research online. Depending on where they look for information, what they find could be inaccurate or misleading.
Pump-and-dump fraud schemes often involve manipulating public opinion about investments by sharing exaggerated or inaccurate information online. Some pump-and-dump schemes begin with press releases sent out to websites that publish such content for business consumers. Other times, those trying to manipulate the market might leave comments on financial news articles and popular blogs. They may post on social media.
The goal is to artificially inflate the perceived value of specific investments. By generating artificial online hype about a particular stock or investment opportunity, the people conducting a pump-and-dump scheme seek to maximize their own financial gain from prior investments.
Essentially, the goal is to drive demand among other investors so that those misrepresenting the value of a stock or business can sell their own holdings for the maximum amount possible. What may seem like a standard guerilla marketing campaign could actually lead to fraud accusations if those who buy into the opportunity later suffer major losses because they fell victim to misleading information shared online.
Defendants accused of participating in a pump-and-dump scheme leading to investment fraud or other white-collar criminal charges often face complex criminal allegations. Reviewing financial evidence with a skilled legal team can be a solid starting point for the development of a viable defense strategy when facing investment fraud charges.