Fighting Investment Fraud: Business Litigation Cases

This article will help you understand:

• How to identify and fight different types of investment fraud.
• What you can recover after investment fraud through successful business litigation.
• What to expect from your business fraud litigation including procedures, results, and duration.

What Are The Different Types Of Investment Fraud?

People steal money in many different ways, but one of the most effective and pernicious methods is investment fraud. Investment fraud can be generally classified as securities fraud, as this involves any instrument, contract, or share of stock where the purchaser does not require you to do any work, while profits are designed to flow to the investor.

Investment fraud usually involves common or preferred stock shares, but can also include the purchase of bonds and other investment opportunities. In any case, a fraudster may lie, deceive, or convince a person to invest in a business opportunity of some kind.

Fortunately, every state in the U.S. has business opportunity laws that require significant disclosures about the business opportunity to be given to any potential investor. When a fraudster fails to make these disclosures – or if the disclosures regarding the cost and risks of the business opportunity are insufficient or outright false – the fraudster can be pursued.

How Can I Recover Investment Losses?

Ultimately, the most effective way to recover your investment losses is to file a lawsuit with a competent lawyer against the fraudster.

In some cases, it is even possible to freeze the assets of the defendant early on in the litigation case, offering an effective legal remedy to those impacted. While government actors tend to have more power for prejudgment asset freezes, there may still be options available to private plaintiffs with the help of competent legal representation.

What Is The Typical Process Of Business – Related Fraud Litigation?

When considering whether or not to bring a business-related fraud case, it is first important to determine if the representations or omissions that led to being defrauded were important enough, or material enough, to constitute actual fraud. At this stage, you should already be consulting with an experienced business fraud attorney, who will be able to help you determine if it is worth continuing.

The second thing that needs to be considered is whether or not the amount of money that was taken from you justifies the budget required to get it back. On the flip side, you must also consider whether you might ever be able to collect on the judgment should you win the case.

It is therefore important that you get a reasonable view of the defendant’s ability to pay. Fortunately, in the case of litigation against company officers and directors, there is often director and officer liability insurance, which should help to this end.

How Long Does Business Litigation Usually Take?

The number of months or years required to complete business litigation varies greatly based on the location and type of court. For instance, a case with a quick answer and summary judgment might only take a few months while another might take the better part of a decade – even when cases are settled out of court, such as through a binding settlement arbitration.

In general, business litigation takes one to three years to get resolved. There are, of course, many exceptions. An experienced business lawyer can usually make a reasonable estimation of the time that it might take to resolve any particular litigation before it is brought, but even the best estimate is never set in stone.

Is It Always Worth Litigating A Business Dispute Or Fraud Dispute? Or Should Resolving A Dispute Outside Of Court Be The First Option?

Resolving a dispute outside of the courtroom and prior to litigation is almost always in the best interest of both parties. Though it’s always helpful to consider your options with an experienced business law attorney before making decisions about how to move forward.

Pre-litigation resolutions are often reached as a result of demand letters, where the potential plaintiff lays out the facts and causes of action in a potential lawsuit. Non-binding mediation is another useful tool to resolve matters outside of court. This is an especially attractive option as mediation can be agreed to by the parties both before litigation has commenced as well as after.

Regardless of where you are at in the process of your case, mediation offers an excellent opportunity for lawyers and clients to get together with an experienced mediator, who can help the parties see the strengths and weaknesses of both sides and come to a practical resolution that avoids the risk, costs, and emotion of litigation.

What Are Some Of The Common Signs Of Investment Fraud?

While it is not always easy to tell when fraud is occurring, there are patterns that every investor should be aware of. These signs occur in most fraud cases, and usually happen in roughly a similar order to the list below:

1. Representations or promises that were made by the person who sold you the investment start failing to come true.
2. You will commonly see explanations that either do not sound plausible, or are given explanations that turn out to be false.
3. The promised potential return is much higher than a typical investment return. (For example, in most cases, if you are told you will earn 10 times what you put in, such promises turn out to be false.)
4. Fraudsters claim that you will get an investment return very quickly, within just a few weeks or months. There will of course be reasons to justify these claims, but these statements often end up being false or misleading.
5. Material omissions start to come to light. Often, fraudsters will not disclose that there is a significant amount of debt in connection with the company selling securities. Alternatively, they may not properly describe the valuation of the company or the number of shares of stock that are outstanding relative to the number of shares you are buying at the purchase price.
6. Fraudsters frequently fail to mention that their business or technology is not developed, or conversely, that it is a very common business with competing companies that are much better managed and financed.

What Should I Do If I Suffered A Significant Investment Loss?

If you have suffered a significant investment loss, you might be the victim of fraud. It is important to speak with a competent and experienced attorney as soon as possible to assess your chances of winning a lawsuit against the fraudster, estimate the cost of bringing such litigation, and determine the likelihood of being able to collect any judgment.

If the chances are good, the cost affordable, and the outcome promising, then you will want someone who will do everything they can to help you recover your losses.

For more information on Process For A Business Litigation Fraud Case, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (801) 355-7878 today.