What is investment fraud?

Investment fraud is a type of consumer fraud that involves deception or false representations in the sale of investments like stocks, bonds, or other financial instruments. In Hawaii, investment fraud is considered a serious crime. It is described as an intentional attempt to mislead an investor into risking money or assets by making false statements, promising high returns, withholding important information, or engaging in other deceptive practices. Examples of investment fraud include Ponzi schemes, affinity fraud, and prime bank fraud. Ponzi schemes are fraudulent investment schemes that lure investors with promises of high returns for low-risk investments. One example is when a person promises high returns with no risk and pays existing investors with the money of new investors. Affinity fraud is when an unscrupulous person preys upon members of a particular religious, ethnic, or social group. The fraudster takes advantage of the trust and friendship within the group to convince members to invest in fraudulent schemes. Prime bank fraud is when a victim is promised high returns on investment accounts at "prime banks." The targeted investors are told that the returns come from trading in high-grade instruments like international bank debt. The victims are later told that there are restrictions that make it impossible to withdraw funds. The returns that investors receive is from money collected from new victims instead of any legitimate investment. Investment fraud is a serious crime and should not be taken lightly. Anyone who is considering investing should do their due diligence and research potential investments thoroughly before making any financial decisions.

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What is investment fraud?

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