SFO - Serious Fraud Office

Other investment fraud

What are other types of investment fraud?

Investment frauds could include you being offered the chance to invest in a new company or an exciting investment opportunity. The fraudsters will often show a series of professional-looking documents to back up their claims and entice investors.

One of the most common investment frauds are:

Ponzi or Pyramid schemes

A 'Ponzi' or pyramid scheme will typically involve an investment offer which promises to provide a higher rate of return than usually offered. For example, a 30 per cent return on investment is claimed when a more realistic return is 5-10 per cent.

How you might be affected by an investment fraud

  • The fraudsters can either take your payment and walk away;
  • Or initially make payments to the investors which cease within a short period.

They do this 'robbing Peter to pay Paul':

  • By using the money from later investors they make the initial repayments to earlier investors, giving the impression that the scheme is successful.
  • In reality it's a short term fix to create a facade while most of the money is stolen by the criminals.

What are the warning signs?

  • Have you been contacted regarding an investment opportunity, out of the blue?
  • Is the investment offering a much higher rate of return than normal?
  • Is it an exclusive opportunity, too good to pass up?

What you should do

  • Do you know a lot about this type of investment?
  • Have you done any research on the company/product/investment?
  • Have you researched the people offering the investment to you? Have you met them, seen their offices, seen what you are investing in?

More information can be found at

FSA consumer Information

External site - opens in new window

 

Action Fraud is the UK's national fraud and internet crime reporting centre. It provides a central point of contact for information about fraud and financially motivated internet crime. If you've been scammed, ripped off or conned, there is something you can do about it - get in touch with Action Fraud.

 

Case example

Four defendants were sentenced at Southwark Crown Court for operating a fraudulent wine investment business.

The SFO received information to suggest that the directors and associates had been operating an investment fraud targeted at individuals living in the USA. The fraud involved the promise of excessively high profits on investments in wine and other alcohol based products.

Five suspects were charged with conspiracy to defraud; four were convicted (one having pleaded guilty at an earlier stage).