What are the different types of investment fraud?

Investment fraud is a serious crime, and it can be costly for those who fall victim to it. In West Virginia, there are many different types of investment fraud. One type of investment fraud is known as a Ponzi scheme. A Ponzi scheme is where funds from new investors are used to pay returns to current investors. It is considered illegal for a company to use money from new investors to pay past investors in this way. Another type of investment fraud is called a boiler room. A boiler room is a sales operation that uses high-pressure tactics to sell worthless investments to unsuspecting investors. Many times, the salesperson lies about the potential returns, or they remain silent about many of the risks of investing. One more type of investment fraud is referred to as the "pump and dump" scheme. This is where a stock is highly promoted to the public, then quickly sold off before the stock goes down in value. Many times, those behind the scheme share insider information which is not available to the general public. Finally, pyramid schemes are also considered a form of investment fraud. These are illegal schemes where new investors are asked to bring in other new investors, and everyone above the new investors gets a portion of the money from the new investors. These schemes are illegal because the money is not actually invested in any type of asset. In West Virginia, it is important to be aware of all types of investment fraud to avoid becoming a victim. It is also important to seek the advice of a financial professional before making any investments. Knowing the different types of investment fraud can help protect your financial future.

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