A private placement program scam usually asks you to invest money in a questionable or unexistent investment. Most of the time you'll either lose a portion or all of your money. These are the most common scams. 8 Typical investment frauds Advance fee scheme An advance fee scheme is when the victim is enticed to pay the money in advance to receive a promise of much more. The only problem is that the fraudster takes the money, and the victim never hears from them again. Scammers typically target investors who have lost money on a risky investment. They will contact the investor and offer to cover their losses. They could offer to purchase or sell the investment at a large profit to the investor, but the investor must pay an "refundable" fee and deposit, or pay taxes. Investors who send more money can lose it too. Boiler room scam A common method of committing a private placement program scam is to set up a makeshift boiler room. They might also send you to their website as a way to convince you that the business is legitimate. They may also create a toll-free number and a respectable address to make the company seem legitimate. But, the business isn't even a thing. The site's information is fake and the office is merely the post office box, or temporary office. By the time you realize you've wasted your money, the scammer has shut down the business and will move on to another scam. Scammer with exempt securities If a company plans to offer securities, it needs to make a prospectus available to securities regulators. Exempt securities are an exception. They can be sold without prospectus, but they're limited to accredited investors, or subject to certain other requirements. Exempt securities are not scams. Scammers might try to convince you that exempt securities are not scams. Be wary if you receive an unsolicited phone call or email about the latest information about a promising businesses that are about to "go public". You may be told that the investment is only available to very wealthy people However, an exception may be granted to those who are not wealthy. There is a chance that you'll be asked to sign a form that inaccurately reflect your income and net worth. It is a case of somebody who is breaking the law if you lie about how much you earn.
Forex fraud Foreign exchange (forex market) is the biggest and the most liquid global financial market. The purpose of trading currencies is to earn money from fluctuations in the exchange rate. Trading in foreign currencies is dangerous. Forex advertisements promote an easy access to market for foreign exchange, typically via courses or software. However, the market for foreign exchange is controlled by huge, well-resourced, international banks that have highly educated personnel, access to cutting technological advancements and massive trading accounts. They are extremely difficult to beat. Trading in Forex can be very risky. Certain strategies for trading in forex could be fraudulent or illegal. Trading in forex can be operated online from other countries, so unregulated companies might not adhere to the regulations. Your money may not be investing as stated, and you may be required to transfer funds into an offshore account before you begin trading, where the money won't be available. You could lose all or a portion of your money under any of these scenarios. Offshore trading fraud If you transfer your money abroad to a different country, this scam promises big profits. Most of the time, the intention is to either avoid or lower your tax burden. Be skeptical of tax avoidance schemes as you may end in owing the government in tax restitution, interest and penalties. There are other dangers associated with offshore investment, too. If you transfer money to another country and it is wrong, you may not always be able to appeal your case to a civil court in Canada. It could be difficult to get the money back. Pension fraud The scam targets those who have retirement savings within the form of a Locked-In Retirement Account (LIRA). The majority of cases do not allow you to withdraw money from an LIRA until you're years old or more. It is likely that you will be taxed on any funds you withdraw. The investment scams is often promoted in ads as a special "RRSP loan" which allows you to circumvent tax laws and access your funds that are locked-in. It is necessary to sell the investments you have in your LIRA to obtain the loan. You can then use the money to purchase shares of the start-up business which the promoter plans to sell. The promoter will lend you 60% to 70% of what you've invested. They will keep the rest as a commission. Investors who get into the scheme early could reap very high returns in the shortest time from what they consider to be interest-paying cheques. They're often so pleased that they decide to invest more or invite friends and family as new investors. The investment, however, isn't real. The investors get "interest cheques" which is money they have taken from investors who have borrowed it. Eventually, new people cease joining the scheme. There's nothing left to be paid out, and you'll never see another cent. The promoters then vanish, taking all the money with them. Scam of pump and dump These scammers use lists of investors who are interested to offer a great deal on stocks that are priced low. You don't know that the company or person who is contacting you owns a large amount of this stock and the stock may not represent a legitimate business. The value of the stock increases as more investors buy shares. The scammer will sell their shares once the stock is at its highest and the value decreases. The stock is then worthless.
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