Investment fraud in the Federal system is usually charged as wire fraud. In most cases the accused promises rates of return which are usually way above market rates, with assurances of no risk. These cases can run the gamut of seeking investor funds to purchase stock, CD’s, real estate or any other investment asset.
One common type of investment fraud is a “Ponzi scheme”. This scheme is based on paying early investors with high rates of return, by siphoning away the money of new investors. New investors are lured in by the word of mouth of early investors who are receiving extraordinary rates of return. Obviously, at some point the scheme must collapse. The scheme derives its name from Charles Ponzi who brought in large sums of money through this scheme. The most notorious Ponzi scheme to date was perpetrated by Bernie Madoff. He brought in approximately $65 billion in investor funds by promising extraordinary rates of return with little risks. He paid the early investors these rates of return with monies from the recent investors. Ultimately, the sheme collapsed. He pled guilty and was sentenced to 150 years in Federal prison and ordered to pay $170 billion in restitution.
Mr. Kuniansky has handled virtually every type of investment fraud case imaginable. The second largest Ponzi scheme on record was committed by Allen Stanford. This Ponzi scheme involved $7 billion in investor funds. Mr. Kuniansky represented one of Mr. Stanford’s accountants in that Ponzi scheme.
Mr. Kuniansky also represented a businessman who sold individuals homes to be developed in a resort in Mexico. According to the indictment, the businessman simply owned some undeveloped land in Mexico, and not the resort with golf courses and marinas that he allegedly represented to investors they would receive.
In most of these investment fraud cases, the defense is that the Defendant did not intentionally make misrepresentations; rather, market conditions outside their control prevented them from performing as represented.