Investment fraud lawyer – help with investment fraud

Investment fraud lawyer – what to do in case of investment fraud? Every year, private investors in Germany and United Kingdom invest tens of billions of euros in a wide variety of capital investments, but not always successfully.

Because wherever a lot of money flows, fraudsters gather.

The spectrum of fraud cases ranges from gold to Bitcoin or other popular cryptocurrencies.

Interest rates on the capital markets are still historically low. Therefore, investments in classic savings products such as call money or time deposits hardly seem attractive any more. Investors are therefore looking for alternative investments.

Investment scammers lure with supposedly lucrative offers and methods that promise quick wealth.

Especially on the internet, fantastic opportunities are advertised. Many dubious online brokers and trading platforms also exploit their opportunities in this way.

• Crypto Trading
• Forex Trading
• CFD Trading
• Bitcoin fraud

Investment fraud lawyer: The lawyers of our law firm assist numerous clients from United Kingdom,Germany, Austria, Switzerland and other European countries who have suffered sometimes considerable losses due to investment fraud by investing abroad.

Learning to recognise investment fraud

As with any form of fraud, investment fraud involves one or more fraudsters and one or more victims. Investment fraud is about fraud with financial investments or capital investments.

As a rule, fraudsters deceive their victims with products and investments that do not exist in reality. They collect money from investors without the intention of investing the capital.

If the fraudsters do this via the internet or if the capital investment is made via the internet, this crime can fall into the area of cybercrime or Internet crime.

The victims often do not get back the capital they invested, let alone the returns promised in advance. And these are often very high. Profits – often in the two- and three-digit percentage range – are promised.

Investment scammers are usually very clever. In this way, they manage to keep up the façade over a long period of time. Many investors actually get small profits paid out after initial deposits. This is supposed to convey security and prevent investors from asking for their deposit back too soon.

In reality, however, the bogus profits are usually financed by the first deposits of new fraud victims. Here, a redistribution of part of the freshly deposited capital takes place to investors who have been with the company for a longer time.

How does investment fraud work?

Investors must therefore be vigilant and think carefully about who they entrust their money to in order not to lose money through investment fraud. There are often clear signs of a possible investment fraud.

The earlier one recognises such, the better. If the following characteristics appear in connection with an investment, you should act with extreme caution:

• The investment advertises exceptionally high interest rates.
• The intermediary receives a high commission upon conclusion.
• There is a push for a quick completion of the plant in order to secure alleged advantages.
• Contact with the intermediary is exclusively by telephone.
• The registered office of the contracting partner is abroad.

Investment fraud scheme

Capital investment fraud is a variant of investment fraud in which the investment fraudsters offer supposedly lucrative capital market products. The aim is to deceive investors and unlawfully enrich themselves from their investments.

Investment fraud often takes place in connection with the sale of securities, subscription rights or shares. The fraudsters offer a share in the profits of a company or offer to increase the deposit on such shares.

Investment fraud belongs to the category of white-collar crime. However, there is no precise definition of the term “white-collar crime”. But it is used to describe all crimes committed in, on or by companies.

The police recorded 81.990 cases of white-collar crime in Germany for the year 2022. Compared to the previous year, this represented an increase of 8.3 percent.

In the sub-category “Fraud and embezzlement in connection with shareholdings and capital investments”, approximately 4,255 cases were recorded for the reporting period.

In addition, the “Bundeslagebild Wirtschaftskriminalität 2022” (Federal Situation Report on Economic Crime 2022), which is most current at the time of writing, speaks of a total loss of approximately 2.441 billion euros due to economic crime.

In addition, there were significant developments in the area of investment fraud with pre-IPO shares of known and unknown companies that had announced an IPO, as well as with financial products on the decentralised financial market in connection with the offering of fraudulent dApps.

Ponzi scheme

One of the best-known scam models where a lot of money is at stake is the so-called “snowball system“. Here, potential investors are lured with the promise of investing in a certain product with a high return.

In addition, one can (and should) market the product oneself parallel to one’s own investment in order to attract new investors.

The investors receive payments as soon as they have recruited new members who also make their investment. In addition, one profits from the payments of other members who are additionally recruited by one’s own contacts, which is why the structure of the payment scheme resembles a pyramid.

The system therefore constantly feeds itself “from below” with new payments. Therefore, it is essential for its survival to constantly generate new investors.

However, snowball systems – or pyramid systems – often collapse very quickly, since a multiple of new customers must be acquired at each level to maintain the system.

The typical incentive in a pyramid scheme is a very high profit, which is to be achieved through a one-time investment. Subsequently, the product is often to be distributed by the investors themselves. However, in many cases there is no relevant economic good behind the product.

Ponzi scheme

The Ponzi scheme, named after its inventor Charles Ponzi, is a variant of the Ponzi scheme. However, the investor does not act as a seller of an (imaginary) good, but merely makes an investment. The core of the “offer” is to achieve high profits with no or only a small risk.

In fact, the money collected primarily finances only the initiator of the scam. Real investments take place relatively rarely and only with a fraction of the generated capital.

Now and then, profits are distributed. This is intended to reassure investors and collect more money.

However, the actual source of the profit distributions is usually concealed.

This is because there are no real profits from earnings. Payouts can only be financed from the deposits of new investors.

The collapse of such a fraud system is gradual, as the initially satisfied customers often reinvest the profit distributions. Accordingly, a lot of time passes before the investors’ claims can no longer be serviced because new investors fail to materialise.

Once the investment fraud has been uncovered, the fraudsters are usually long gone.

Investment fraud on the grey capital market

Companies that are not subject to state control and that have to comply with only a few legal requirements also operate on the financial markets. In such cases, one speaks of the so-called “grey capital market”, an area in which investors should act with particular caution.

Because in the grey capital market, which is not subject to state financial supervision, the line between high “incidental costs” that flow to the initiators and the characteristics of fraud is often blurred.

In capital investment fraud, capital market products with regulations and commission payments that are disadvantageous for investors are often subsumed under the term “legal fraud”. This is because questionable structures are usually used in the distribution of the products.

Capital investment fraud pursuant to § 264a StGB (German Criminal Code)

The offence of capital investment fraud is regulated in the Criminal Code. There it is stated under § 264a para. 1 StGB that anyone who, in connection with:

1. the distribution of securities, subscription rights or shares intended to grant a participation in the results of an enterprise, or
2. the offer to increase the contribution to such shares,

makes incorrect advantageous statements or conceals disadvantageous facts from a larger circle of persons in prospectuses or in presentations or overviews of the asset situation with regard to the circumstances relevant to the decision on the acquisition or increase.

Capital investment fraud, as defined in section 264a of the Criminal Code, is a so-called “abstract” endangering offence. This means that it is not necessary that the investors have actually suffered a financial loss.

Accordingly, it is sufficient that incorrect advantageous statements are made or disadvantageous facts are concealed.

If a provider deceives about essential characteristics of an investment (e.g. the return) in a personal counselling interview, this is a “normal” case of fraud. Investment fraud can only be committed through public advertising in prospectuses or representations.

Tax aspects of capital investment fraud

According to the Federal Fiscal Court, the inflow of capital income cannot only occur by crediting the books of the obligor. This is also possible by means of a separate agreement between the debtor and the creditor, according to which the amount is henceforth to be owed for another legal reason.

In the case of capital participation in a Ponzi scheme, bogus returns may thus also be taxable.

However, it may happen that the operator of the Ponzi scheme refuses to pay out immediately upon the investor’s request and instead negotiates other payment modalities. This is probably to be seen as a lack of willingness to perform.

A taxable inflow in the case of capital investment fraud must then be denied. (IWW Institute)

Investment fraud Germany – Investment fraud lawyer advises

In 2022, there were 7,255 cases of investment fraud and embezzlement recorded by the police in Germany.

However, the number of unreported cases is always far higher, as many of those affected by investment fraud do not consider legal options – even in the case of total loss.

Investment fraud cases

With these two examples, we would like to take a look at the biggest fraud cases in Germany.
Flowtex: There have already been several major investment fraud cases in Germany with numerous injured parties and enormously high financial losses. One of the biggest investment fraud cases was that of the company Flowtex in the 1990s.

Flowtex’s business idea sounded promising: its horizontal drilling systems were to be used to lay pipelines underground in the future without having to tear up the road or block traffic with large construction sites.

However, the more than 3,000 machines, allegedly bought with money from banks and leasing companies, existed only on paper. Falsified balance sheets, more than 100 investigations and a total loss of more than one billion euros made the Flowtex scandal the biggest economic fraud case to date.

Largest investment fraud in Germany – Wirecard? Currently, the Wirecard case is still far more present. The public prosecutor’s office accuses the company, which filed for insolvency in 2020, of “gang-related fraud”. This was preceded by the repeated postponement of the submission of the 2019 annual balance sheet.

Finally, Wirecard declared that a sum of 1.9 billion euros, which was allegedly booked to escrow accounts, did not exist.

The former payment service provider is said to have defrauded banks and investors of more than three billion euros.

But also in the area of online trading, for example with cryptocurrencies or binary options, and on the grey capital market, there are repeatedly major cases of fraud in which investors suffer enormous losses.

In some cases, investigating authorities, in cooperation with the police of other countries, succeed in breaking up fraud gangs.

Then it is of great importance for the affected investors to assert their claims for damages through a lawyer.

How can I recognise an investment fraud?

There are other signs of dubious dealings and investment fraud. Does your intermediary receive a high commission for concluding an investment? Then you should consider that the intermediary has a strong interest in you investing your money in certain investments.

The problem is obvious: the advice given is not necessarily objective.

So some intermediaries will try to convince you to invest in an investment that is not tailored to your personal needs. On the one hand, there is the danger that risks will be concealed from you and that the prospects for success of the investment will be presented too positively.

On the other hand, they may deliberately ignore your risk profile and conceal less risky options.
In addition, you should be cautious as soon as they make the immediate conclusion of the investment palatable to you by offering certain advantages. Alleged preferential prices or securing tax advantages are common arguments.

The intention behind this is clear. For in this way, investors are deprived of the opportunity to consider their investment too thoroughly.

Nor should there be any comparison with other offers or even research into the investment in question. Investors are supposed to transfer their money as quickly as possible. Often, the fraudsters have already achieved their goal and committed investment fraud.

Testimonials on dubious providers: Does the internet “lie”?

Many investors today are enlightened and inform themselves thoroughly about the products offered to them and the service provider(s) behind them. Often, the research for information takes place on the internet.

This is convenient on the one hand and dangerous on the other. Because even fraudsters know that seriousness plays a decisive role in the run-up to a planned investment.

With comparatively little effort, a positive image can be created today, which at first glance appears solid and honest even to experienced investors.

The investment advisors appear professionally competent, there are sufficient references and the website is professionally designed. Can this be an investment scam?

To be on the safe side, some investors also research the internet for experiences of other investors and objective test reports. Often they come across very positively worded information that praises the provider of choice as extremely competent and reliable.

However, caution is advised with consistently favourable opinions.

Such experience reports from the online sector should be met with scepticism. For the “black sheep” of the industry, the “opinion mongering” on the internet is an optimal advertising tool.

Fraud Cyprus – Online Trading

Especially when it comes to online trading, there are always reports on the subject of “investment fraud Cyprus”. This is because Cyprus is interesting as a place of business for many financial service providers. This is also the reason why one comes across a large number of providers when searching for the term “broker Cyprus”.

It is true that a large number of online brokers based in Cyprus are supervised by the local financial supervisory authority (CySec). However, there are also a number of known cases of fraudulent brokers claiming to be licensed by the Cyprus Exchange and Securities Commission.
In fact, however, in many cases these claims are only pretended.

Whether a broker is registered with CySec and is subject to official supervision can be determined quite quickly by looking at the register of authorities. In addition, CySec uses a “number/year number” system for the numbering of licensed companies.

This means that an alleged registration number that indicates a number greater than 22 after the slash is a warning sign.

Why do so many brokers settle in Cyprus?

The fact that many financial service providers use Limassol (the capital of Cyprus) as their headquarters has nothing to do with the good weather.

This is because a regulatory loophole in the MiFID rules states that a financial services provider regulated in one EU member state is automatically allowed to carry out its unrestricted business activities within the entire European Union.

However, in practice, this regulation, which is designed for harmonisation, is not always advantageous for the clients of financial service providers.

If a provider does not want to submit to the relatively strict regulatory provisions of the supervisory authorities of the large EU member states such as Germany (BaFin) or France (AMF), there is still the option of switching to Cyprus.

According to a report by ESMA (the European Securities and Markets Authority), conditions there are characterised by a number of shortcomings. For example, CySec has too few staff to adequately supervise the many companies.

In addition, the authority performs its supervisory function only reactively, and both monitoring and complaint management are inadequate.

With brokers from Cyprus, clients thus run the risk of encountering a provider that is hardly or inadequately supervised. This, however, can lead to risks with regard to the investor’s deposit. Evidence can often be found in the context of internet searches for “fraud Cyprus”.

Investigations by authorities lead to Cyprus

As recently as autumn 2021, cybercrime investigators discovered and dismantled a network of fraudsters that had defrauded investors of their money via various online trading platforms.

According to the authorities, the total losses were in the hundreds of millions of euros, with at least 15 million euros going to Germany alone. The fraud often followed the same pattern.

Online advertisements with fake testimonials such as Günther Jauch were used to persuade investors to make initial low deposits. As soon as they had made these deposits, calls were constantly made with the intention of raising significantly higher investment sums.

In fact, however, the money invested by the clients was never invested. Accordingly, there had never been any requested payouts of profits or credit balances. According to the investigating authorities, the trail led not only to Ukraine and Bulgaria, but also to Cyprus.

It was in Cyprus that the mastermind of the internationally operating gang was caught red-handed. Accordingly, the German investigators had applied to the Cypriot authorities for the extradition of the alleged perpetrator.

Investment fraud: with online marketing to a positive reputation

It’s easy for fraudulent providers to buy posts with a positive bottom line. This is because when a service provider runs an advertising programme (“affiliate marketing”), he remunerates third parties who bring him new customers with a commission.

It can be assumed that these third parties only express themselves positively as advertising partners in order to receive their remuneration.

In addition, there is the possibility of creating websites oneself, on which the providers report favourably about their investment opportunities.

It is not uncommon for a lot of effort and money to be invested here in order to appear in the top positions for the corresponding search queries. This ensures a constant stream of visitors and, in the long run, always brings in new clients.

Our law firm in investor protection therefore advises against investments where doubts about the seriousness arise. This applies even if an offer receives positive feedback on the internet. If you sense a possible investment fraud, a lawyer can initiate an investigation or legal action.

In general, you should ask yourself at least these three questions before you entrust your money to a (foreign) third party and become a victim of investment fraud:

• Are you planning an investment that seems absolutely safe and promises good profits?
• Do the projected returns of an investment advisor just seem too high to be realistic?
• Is your money really safely invested or do you have to expect a total financial loss?

Modern financial products: promising venture or investment fraud?

More and more customers are losing direct contact with their bank. Whereas a few years ago people used to visit their bank several times a month, today many internet banks have taken over customer care.

In addition, the world has changed, business relationships have become global(er) – and with it the opportunities for investment fraud.

Today, it is easy to conclude contracts with service providers from all over the world. All you need for internet fraud is a computer with an internet connection and a search engine.

Then you quickly come across providers of financial services from Asia to the Caribbean. What they have in common is that they specialise in “modern financial investments”.

By no means every provider of modern forms of savings is a fraud. Such statements could only be made after a court ruling.

But time and again one comes across investors who have had difficulties with forex trading, crypto trading or worthless real estate funds. Because investment fraud occurs in many different forms today.

Investment fraud – high risks due to leverage effect

Financial products in which investors speculate on short-term price developments have been in vogue in recent years. Such “leveraged” financial products promise enormous profits because investors speculate with a “lever” or “kicker” that multiplies the stake.

To the same extent, however, there is the threat of total loss of the invested funds through investment fraud.

For many investors, this mixture seems appealing, even if it resembles betting in casinos. While CFD trading is already partly banned in Belgium and strongly limited in Great Britain, the German financial supervisory authority at least initiated the abolition of the obligation to make additional contributions.

Investment fraud often begins with a telephone call

The initiation of a business transaction by means of an unsolicited telephone call (“cold call”) is prohibited in Germany. The Federal Network Agency points out on its website that consumers may not be called for advertising purposes without express prior consent.

Furthermore, callers are not allowed to suppress their telephone number during advertising calls.

In practice, however, especially providers from abroad do not comply with the law. And so it can happen that you unexpectedly receive calls from distant (Singapore) or near (Switzerland) countries that you did not expect.

At the other end of the line: a supposed investment advisor with an allegedly exclusive offer.

Should you take a phone call and get involved in a conversation with strangers where your money is at stake, watch out for these circumstances:

• An alleged investment advisor contacts you by telephone without you having requested a conversation, for example via a website?
• They offer you the purchase of shares at a preferential price or would like to inform you about a new fund or pre-IPO shares that promise particularly promising returns?
• But personal contact with the advisor never materialises?

Systematic fraud

Such calls are often made by fraudsters who often operate from a safe distance abroad. The approach is so well orchestrated that one can certainly speak of systematic investment fraud.

In addition, professional-looking websites of alleged consulting firms can be found on the Internet, which are supposed to establish trust.

The potential companies in which the investors’ capital is supposed to be invested also have their own websites. But here, too, caution is advised.

Because if it later turns out that it was a fraudulent investment and investment fraud, it is usually difficult to catch those responsible if there has never been any personal contact before.

A similar problem arises if your contractual partner is based abroad. This is because claims that you would like to assert against your service provider are more expensive to enforce under civil law if they have to be collected abroad.

Especially in the case of addresses of known tax havens, you should think twice about whether you consider your contractual partner to be reputable or whether it could be a case of investment fraud.

Investment fraud what to do?

Investment fraud Germany – the best protection against investment fraud is not to fall for it in the first place. It is not hopeless to recover lost capital at a later point in time. Nevertheless, such a plan always involves a certain amount of effort for the deceived investor.

Against this background, you should know a few simple rules in order to exclude at least certain risks for yourself. This is how you can possibly prevent an investment fraud:

• Do not be blinded by promises of high returns. If you want to earn interest above the market level, you usually have to resort to speculative forms of investment. It is true that high profits can never be ruled out. Nevertheless, as a rule of thumb, high yields always go hand in hand with high risks.
• Ask your intermediary for information about their commission. As a rule, intermediaries are obliged to do this of their own accord anyway. Is the commission disproportionately high? Then you should consider that the intermediary has a strong self-interest in you concluding certain investments.
• Take enough time. Only sign contracts after you have done extensive research on the system. Compare the offer with other investments. But never make a decision before you (and not your broker!) have cleared up all your doubts.
• Insist on personal advice on the spot! Do not entrust your money to someone you have never looked in the eye. Reputable intermediaries will advise you in their business premises or arrange an appointment at your home.
• Give preference to companies with their registered office in Germany or in United Kingdom. This will make it much easier for you to assert your claims in the event of a dispute.

If you take these tips from our lawyers to heart, you are already significantly limiting your personal risk.

Take action in case of investment fraud

Report investment fraud: Investment fraud lawyer helps aggrieved parties. If the unfortunate outcome of an investment does occur, don’t give up on investment fraud.

From retained profits to missing payouts to price manipulation or the “disappearance” of the financial advisor: the forms of investment fraud are manifold.

If the provider is also based abroad, many investors see themselves in a supposedly hopeless situation. Some countries and states stood out in the past when it came to complaints from investors who thought they had fallen for investment fraud. Among them were:

• Hong Kong,
• Taiwan,
• Cyprus,
• Marshall Islands,
• Dominica,
• St Vincent and the Grenadines,
• Bulgaria,
• Estonia,
• Romania.

In the past, providers resided in these countries where investors had to suffer massive losses in the context of a capital investment. In most cases, the addresses found on the providers’ websites are only a post office box.

At first glance, this makes both research and the actual contacting of the service provider more difficult.

For many people affected by investment fraud, the distant jurisdiction may be a deterrent. But even in these cases, in our experience, legal claims can be enforced in some individual cases.

This means for aggrieved investors: Even money long thought lost can still be recovered in these cases.

Statute of limitations for investment fraud – what do those affected need to bear in mind?

Consumers who only realise after years that they have been defrauded should by no means bury their heads in the sand. Even after a long time, your claim for damages and the possibility of criminal proceedings should be examined by a lawyer.

The basis for this is the decision of the Nuremberg Higher Regional Court in 2007. In a case of investment fraud, the injured party claimed damages 9 years after the fraud.

The OLG assessed the fraud case as not being statute-barred, since the victim of the fraud – for the period of limitation to begin – must have knowledge of the investment fraud. The statute of limitations does not begin to run until the victim is aware of the damage and the damaging party.

Accordingly, ongoing investigations or arrest warrants issued by the public prosecutor’s office are not sufficient for knowledge.

Claim for damages § 823 II BGB: The limitation period begins when the injured party has taken note of the result of the investigation. Decisive here is, for example, the inspection of the investigation files.

Where can I get help with investment fraud?

If you suspect that you may have become a victim of dubious dealings, quick action is mandatory. Because many of the fraudulent providers calculate that they will be exposed sooner or later.

Therefore, it can happen that you literally stand in front of closed doors if you hesitate too long.

The sooner you assert your claims and get a lawyer involved, the greater the likelihood that you will get your money back.

If you act too late, as the past has often shown, you sometimes come away empty-handed when it comes to clearing up investment fraud.

Because once the company to which you entrusted your investment has filed for insolvency, this makes it much more difficult to recover your claims. The same applies if the persons involved have already absconded with your money.

If you are looking for support in the context of investment fraud, contact the lawyers of the Askalane law firm. Our lawyers will check for you whether you can assert claims against your intermediary, the company of your investment or third parties.

If there is a suspicion of investment fraud, we work closely with the competent prosecution authorities.

The lawyers of the Askalane law firm advise injured clients from United Kingdom, Germany, Austria, Switzerland and the Benelux countries.

How do I enquire about a lawyer?

Nowadays, contact is usually made by telephone or e-mail. Essential information for the capital investment fraud lawyer is:

1. Your own contact details: Surname and first name, telephone number, e-mail address – so that the lawyer can call you back if necessary.
2. What is the amount of the losses you have suffered as a result of the investment fraud?
3. What is the name of the wrongdoer?
4. Contact details of the damaging party, website, evidence such as screenshots of the communication between you
5. How long ago did the fraud occur?
6. Have you already filed a criminal complaint with the police?
7. Do you know any other victims?

If you would like to discuss your case with our investment fraud lawyers, please feel free to use our contact form or call us.

Tell us about your experiences in a free initial consultation. We will give you a realistic and honest assessment as part of an individual case review.

Investment fraud Money back: The Askalane law firm will file a complaint of fraud with the police on your behalf, examine your claims for damages and all other civil and criminal law options to recover your investments.

Investment fraud lawyer – investment fraud money back

We offer affected investors and clients – depending on the individual case – the following services in the event of investment fraud:

• Involving the police and financial supervisory authorities
• There are numerous “collective proceedings” against certain fraud companies with the police and public prosecutors, both in Germany and abroad. Askalane Attorneys at Law represent many injured parties and are in close contact with the local authorities.
• Public prosecutors’ offices and financial supervisory authorities in Germany and abroad have been able to block bank accounts of the fraudsters and seize assets in individual cases following a criminal complaint for fraud.
• In many countries, our law firm has personal contacts at the authorities. Askalane Attorneys at Law have already successfully concluded proceedings – e.g. in London – in cooperation with local law firms. As a result, our clients’ deposits were refunded.
• Credit card as a means of payment? Repayment is possible with VISA, Master Card, American Express.
• Have you made payments to an alleged fraudster by credit card? If so, you as the injured party can often claim protection from your credit card provider. Amounts already paid can sometimes be charged back if necessary. Askalane Attorneys at Law will check for you whether the necessary conditions are met.
• Charging back bank transfers
• For many aggrieved parties, there is the possibility of reversing a transfer. Even if the transfer was made many months ago, there have been successes here. It does not always matter that the accounts of the alleged fraudsters are regularly abroad.