There’s a lot of misinformation in the world today. Even though most of us have our guard up and think that we can make fully informed decisions that support our best interests, the truth of the matter is that there are some pretty slick and sleazy investment firms out their that want nothing more than to take your money under the appearance sound financial planning when in fact they want it for their own financial gain.
Just look at one recent case out of California. There, the SEC froze an investment firm’s assets after it discovered that the firm’s founder was likely engaging in investment fraud.
According to reports, Elevate Investments LLC garnered more than $7 million in investments that were then deposited into bank accounts owned by the founder and his wife rather than placed in an investment fund. In fact, according to the SEC, the investment fund that investors thought they were contributing to never existed.
Making matters worse are the company’s apparently fraudulent claims about its success as an investment firm. Elevate claimed that it consistently generated profits when, in fact, the opposite was true. In fact, records show that in just a year, investors with Elevate lost nearly $4 million, and about $400,000 of investment funds were deposited into the bank account of the founder’s wife.
Government action isn’t enough to protect you
While it’s laudable that the SEC steps in to take action on these kinds of cases to prevent any further wrongdoing, the grim reality is that it’s often far too late to ensure that investors can protect their financial interests.
Freezing assets and obtaining injunctions fall far too short. That’s why those who have been wronged by investment fraud need to know how to build their case and take the legal action that is often necessary to recover the compensation that they are owed.
Building a securities fraud case
To prove a securities fraud case in the civil context, you’re going to have to prove certain legal elements.
First, you’ll have to show that there was some misrepresentation or false information given. Looking at the example above, it seems clear that consistent historical gains when a firm experienced consistent historical losses are false and misleading. Not to mention that investors’ money appeared to have never been placed in an investment fund to begin with.
Second, you’ll have to show that you relied on that information to your detriment. In other words, you’ll have to present evidence that shows that you only decided to engage in an investment because of the wrong or misleading information that was presented to you, and that decision resulted in financial harm.
To prove these elements, in addition to the actual damages that you’ve suffered, you’ll need evidence. This can be tricky to gather in the securities context, but SEC and FBI investigations can be beneficial.
You can also take depositions of those involved, subpoena records that show a pattern of misused funds and dissemination of inaccurate information, and even gather experts who can speak as to the financial practices of certain investment funds.