Types of Criminal Defense Cases Protass Law PLLC Handles
View More

Investment Fraud

Though the headline-making stories regarding investment fraud often involve millions, or even billions, of dollars and big names, almost anyone working in the financial services industry can be charged with a securities fraud offense. Whether charged in federal or state court, the penalties for a conviction can be extremely harsh. Regardless of the allegations, though, you’re still entitled to your day in court in any criminal case. An experienced investment and securities fraud attorney can assist in developing viable strategies for defending against charges of financial fraud and can represent you throughout the process, most importantly even before charges are lodged.

At Protass Law PLLC, our investment fraud lawyer has been serving individuals and entities in financial fraud cases for more than 20 years, so he’s prepared to help you. For a free case consultation and to learn about the criminal defense overview/laws relevant to your case, contact us today at (212) 455-0335.

Securities Fraud Under U.S. Law

Most cases involving securities and commodities fraud are brought in federal court, where the penalties are potentially significantly harsher than those available in New York’s courts. Commonly known as “stock fraud” or “investment fraud,” 18 U.S.C. § 1348 provides for the punishment by up to 25 years in prison for anyone who knowingly executes, or attempts to execute, a scheme or artifice to: (1) obtain, by means of false or fraudulent pretenses, representations, or promises, any money or property in connection with the purchase or sale of any security or commodity; or (2) defraud any person in connection with any security or commodity.

The SEC often brings parallel civil charges when federal prosecutors bring cases for securities fraud in which they seek financial penalties and seek to bar offenders from ever working again in the securities industry.

Whether involving state or federal prosecutors, any investigation into securities or any other form of finance is serious business. Potentially armed with subpoenas and/or search warrants, investigators and prosecutors have enormous power to drill into your background and business operations. Indeed, by the time detectives or other investigators come to question or arrest you, you may learn for the first time that you have been the target of a long-term investigation. Having an attorney represent you, if possible, before charges are brought is critical to the outcome of any investigation – whether charges are even brought and, if you are arrested, the charges and potential penalties you face.

Securities Fraud Under N.Y. Law

The key statute used by prosecutors in New York to combat virtually all forms of financial and securities fraud is the Martin Act. Enacted in 1921, the Martin Act grants local and state prosecutors expansive power to conduct investigations of and bring charges for all types of deceitful practices, as well as false promises, related to the offer, sale or purchase of securities and commodities taking place within or emanating from the State of New York. The law is remedial in nature and is construed liberally, and invests prosecutors with wide-ranging enforcement powers, including conducting investigations into fraudulent practices (through tools such as subpoenas and search warrants), taking investigative testimony before charges are brought, initiating civil proceedings for injunctive relief or restitution and, of course, bringing criminal charges when prosecutors believe evidence exists of a violation of law.

Not only can prosecutors pursue criminal actions as either misdemeanors or felonies, but they can try to claw back monies through civil proceedings from defendants charged with violating the Martin Act’s provisions.

Among other things, charges can be brought under the Martin Act for:

  • Making false statements to induce or promote a transaction involving securities
  • Use deceptive tactics to induce or promote such a transaction
  • Promising a return or financial gain that’s unreasonable under the circumstances
  • Knowing or having reason to know your statements are false or misleading

Under the Martin Act, prosecutors can seek and judges can impose a wide range of punishments and sentences. Misdemeanor violations can carry sentences up to one year in jail, while class E felony violation can be punished by up to four years in prison.

Types of Investment and Stock Fraud

Due to the breadth of conduct covered by federal and state law, many acts can constitute financial fraud. Some common scenarios include:

Fraud as an Executive

As a corporate officer or member of the board of directors, you have a duty to accurately report the company’s financial details to stakeholders. By making misrepresentations concerning a corporations financial well-being, you may induce others to buy stock in a company that’s not in as good a financial condition as the public believes it to be. If the company fails, or even if the price of the company’s stock drops, investors could lose the value of their investment.

Insider Trading

You could be charged with securities fraud if you buy or sell stock based upon material, non-public (that is, confidential) information about a company. Insider trading is categorized as investment fraud because you’re taking advantage of details about a company that aren’t yet public to enjoy a financial gain.

Making Misrepresentations / “Pump and Dump”

You may engage in securities fraud even if you’re not a corporate insider by making misrepresentations to the investing public about the financial prospects of a publicly traded company. Typically undertaken by brokers or other industry professional, and often known as a “pump and dump scheme,” these third-party misrepresentations cause investors to base their investment decisions on false information that, when revealed as false, causes investment losses when the stock price for a company in which an investor has taken a stake drops.

Given the breadth of conduct that could result in charges of securities fraud, and the complex labyrinth of criminal charges that could be brought if a financial services industry professional crosses the line of legality, working with an investment fraud attorney is critical upon the first hint of an investigation.

Collateral Consequences of an Investment/Securities Fraud Conviction

The consequences of a conviction for securities fraud don’t always end with fines and imprisonment. Rather, both federal and state law allow for restitution to victims, forfeiture of ill-gotten gains, fines other forms of financial penalties. Moreover, if are registered to work in the securities industry, you could lose your license.

Discuss Defense Options with an Investment Fraud Lawyer

In any criminal case, a prosecutor must prove that you’re guilty beyond a reasonable doubt. So, to defend against charges of securities fraud charges, we pick apart each element of the charged offense and attack the prosecution’s evidence piece-by-piece, including any evidence of fraudulent intent and justifiable reliance by any purported victim – element of any financial fraud case that are notoriously hard for prosecutors to prove. With help from a skilled securities fraud attorney, you can avoid criminal charges altogether, minimize the consequences of charges that are brought or, if necessary, raise sufficient questions in the mind of the jurors that you are acquitted at trial.

Contact an Investment Fraud Attorney for Help

If you have questions or believe you’re under investigation for a fraud offense, it’s important to speak with a knowledgeable securities fraud lawyer as soon as possible. To learn more about potential defense strategies, call Protass Law PLLC at (212) 455-0335, or reach out online to schedule a free, initial evaluation of your case.