Investment Frauds: Victims in a State of Shock

Bernard Madoff's investment fraud has unfolded many similar fraud schemes going on in the securities industry. Investors are afraid they may be a victim of a similar fraud at some other investment firm. Bernard Madoff, a 70-year-old Wall Street trader was arrested by the F.B.I. and charged with securities fraud. He is charged with conducting Ponzi scheme involving $50 billion in fraud, which is the largest in the history of financial scams. In a Ponzi scheme, new investments are used to payoff the old investments. The rate of interest for these investments is very high. This scheme fails when new investors stop investing and there is no money left for rotation. Few other big names associated with fund frauds are New York Mets owner Fred Wilpon and GMAC Chairman J. Ezra Merkin.

Victims have not only been hit financially but have lost all trust in the financial industry and the government. They are in a state of shock as their future seems very uncertain. Few of the alleged victims are in their 90s and cannot overcome the fact that they have no financial security left. They had invested their entire life's savings in these funds and are totally wiped out.

One of the measures taken by the government to pay off the lenders is liquidating all the assets of the fund. The government can reimburse $ 500,000 for securities and $ 100,000 for cash accounts by liquidation.

In an interview with Daily Mail, UK writer Muhammad Rafeeq said "I have acted as a professional consultant to major EC and US financial institutions on corporate and institutional credit risk and the idea that anyone in HSBC or Santander could authorize large investment without the internal checks and controls being employed are almost impossible. To try and believe that every institution that invested in Madoff circumvented their internal control procedures is impossible." This indicates that the fraud is the result of the financial system being corrupt and greedy. There may be a possibility that at the end the innocent tax payers have no choice than to bail out the victims.

Westchester securities fraud lawyer said "Investors can protect themselves by looking for signs of investment fraud. If someone tells you that your profit is guaranteed or that he can get you an unusually high rate of return, you should recognize that this is a fraudulent sales pitch. If a broker you do not know well advises you to invest with him, ask him to send information to support his statements and recommendations. Make sure you understand the costs and liquidity before investing. Never invest in a product that you do not understand. Keep notes of conversations with brokers. If you suspect that the broker is mishandling your money, immediately contact the branch manager or the firm’s law or compliance department. If you are not able to resolve the problem that way, find and hire an experienced securities arbitration lawyer." Charlotte bankruptcy attorney said "There are some fund fraud victims who have substantial net worth left but few have lost everything in these investment frauds".