Financial fraud and scams have, not only vastly increased in recent months but the perpetrators are becoming ever more sophisticated and are devising schemes that provide enough breathing space for them to vanish before their unfortunate victims discover their regrettable position.
Frequently inexperienced investors are lured into a Foreign Exchange (Forex) scam with considerable skill. The defrauded investor often does not recognise the extent of the fraudulent actions against them. Giambrone & Partners' banking and financial fraud team have noted a variation in the techniques used by fraudulent investment brokers.
Typically when an individual who is inexperienced in the investment market exhibits an interest in exploring investment opportunities and is targeted by a fraudulent broker, there is a well-planned strategy to lure the unfortunate victim into making larger and larger trades.
A friendly account manager makes the trades on behalf of the victim, initially, relatively small amounts of money are required and the account seems to be making profits. Many victims allow their account manager to take over their computer via software such as Anydesk or Splashtop. This action, of course, often grants access to personal data and exposes the inexperienced investor to breaches of privacy. Bank accounts can often be accessed which enables the fraudster to trade using their victim's identity. As the scam progresses the requests for more money for trades become far more pressing and frequent as the account begins to lose money.
When the inexperienced investor becomes concerned and wants to withdraw money from their account or close their account they are often told that more money is required to enable the account manager to trade out of the losses and place the account in profit or their account will be closed down and they will lose any chance of regaining their money. Or they may be told that a sum of money is required to enable the withdrawal of funds to take place. Many victims borrow money either to continue trading or to facilitate the withdrawal procedure.
If the victim has been encouraged to continue trading to put the account into profit, the fraudulent broker will begin to show "profits" on the victim's account, thereby persuading the novice investor there was nothing to worry about and to carry on trading. This exercise is often repeated more than once, during which time the account manager is maintaining the pretence of establishing an even closer friendship with the victim, drawing them into believing that the account manager has their best interests at heart.
Joanna Bailey, an associate who leads the banking and financial fraud team, commented "the novice investors are following a well-trodden path of deception that is commonplace in financial investment scams. Inexperienced investors have no way of knowing that the suggestions made by their so-called account managers have no validity and are only intended to extract more money from them" Joanna further pointed out "the trust that new investors place in their account managers is due to their lack of knowledge of the markets. They believe what they are being told and when they find themselves in the position of having lost a great deal of money they are then told the money can be retrieved with further trades which will eventually be successful; by the time the unfortunate victim reaches this stage they are very worried and it seems like a life-line and so they comply."
A recent trend that Giambrone & Partners' banking and financial fraud team are noticing is that fraudsters, having enticed their victims into trading on the Forex market or contracts for difference (CFD) or similar and taken them almost to the point of financial ruin, they are suggesting that there is a new investment opportunity in the shape of cryptocurrency, a notoriously volatile market with limited accountability. The victim will nearly always follow the advice extended by their account manager
Demetri Benzaintes, from Giambrone & Partners' banking and financial fraud team, commented "fraudsters are employing more sophisticated and complex ways of deceiving their victims, who frequently are unaware that they have been scammed until the very last minute when their accounts are abruptly closed" Demetri further commented "once the fraudulent broker has gained control of the victim's computer they can and do perpetrate further frauds in the inexperienced victim's name. We have clients who were unaware that a bitcoin wallet had been opened under their name, who were led to believe that the incoming transactions into their bank accounts were the monies related to their withdrawal requests. The reason why this technique is of particular concern is that it allows the fraudsters to completely cover their tracks."
The route to recovering funds lost to scams is frequently very challenging, however, Giambrone & Partners' highly regarded banking and financial fraud team has developed a range of strategies perfected over 15 years experience in this practice area. Our diligent lawyers constantly monitor the financial markets to be aware of the changes of tactics that the fraudsters employ.
Joanna Bailey heads the banking and financial fraud team she advises international and UK-based clients in a range of financial services disputes. Joanna is highly regarded for her meticulous approach and her persistence when investigating international fraud. Her considerable experience and dogged pursuit frequently leads to the successful recovery of funds for clients. Joanna has enjoyed a substantial level of recovery for our clients, often in cases that did not predict success.
Demetri Bezaintes works with Joanna and has a thorough knowledge of investment fraud and fund tracing. He works tenaciously for our clients, advising on forex and cryptocurrency trading disputes and regulatory investigations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.