My Investment Money Was Stolen. Now What?


Investment scam California

Optimism often runs high around new business opportunities. The possibility of big returns on investment—the opportunity to “get in the ground floor” of a new business trend—can be difficult to turn down. Some unscrupulous “business advisors” take advantage of this optimism to steal hard-earned money. After the investment money has been handed over to a scamming advisor, it can be difficult to recover the money even if a legal judgment can be won. 

The story often unfolds in a similar pattern: The “advisor” pitches an idea. The investor is hesitant at first, but the advisor assuages. The advisor uses a combination of FOMO (fear of missing out…on the upside), and assurances in the form of a promissory note, stock, or guarantee (supposedly limiting the risk).

The advisor makes promises of high returns, often by a certain date (usually soon.) When the due date of the promised return comes, the investor contacts the advisor and the advisor offers excuses….and further assurances. The business has encountered an unexpected barrier, he says, but soon he will overcome the barrier and the outlook is supposedly even better than originally predicted. If the scam is a ponzi-type scheme, early returns are sometimes tendered to build further confidence, but then the well runs dry. The investor accepts these assurances for a while, but sooner or later it becomes clear that the advisor is “all talk”—he is buying time.

The investor starts to wonder if the business was ever real or legitimate in the first place. What did the advisor really do with my money? What does the investor really know about the business?  The investor searches the Internet and realizes, while the business might have an official-looking website, there isn’t much additional evidence that the business is legitimate or actually exists!

At this point the investor often seeks a better understanding of what, exactly, that promissory note, stock, or guarantee is worth. The investor discovers now that the promissory note, stock, or guarantee might not be worth anything if the business folds, declares bankruptcy, or if the business and guarantor simply have no significant assets. Now the investor is seriously alarmed and upset—and rightly so.

There are, however, often possibilities of collecting against the “advisor” or others involved with the business, under certain circumstances. The matter has to be investigated and handled properly from the beginning. If this story sounds familiar, it’s probably time to consult a lawyer.

Brodie Smith and Anthony Lanza, litigation and trial attorneys licensed in California, have developed a focused practice area prosecuting investment fraud lawsuits. They can be contacted at (949) 221-0490. Note: Lanza & Smith does not generally handle cases in which the victim has been scammed over the Internet, but rather, cases in which the victim has had in-person contact with the potential defendant(s).

The information in this blog post does not constitute legal advice, nor create and attorney-client relationship. Laws constantly change, and this information may become outdated; moreover, the information here is only a general overview and may omit some aspects of the law. It is provided for discussion purposes only; not to be relied upon by the reader in making any real-world decisions.

©2022 Lanza & Smith PLC. All rights reserved.

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