Defining Fraud Unit 2 Seminar

Defining Fraud In this weeks seminar, be prepared to discuss a recent case where fraud was at the center of the alleged criminal activity. We will attempt to identify any facts as they relate to the elements necessary to prove fraud. At this stage, it is important to gain an appreciation of the major elements of fraud, but your expertise will expand in the ensuing units.

Bernie Madoff Charged with committing a $50 Billion Ponzi scheme. Founder of Bernard L. Madoff Investment Securities. Founded almost 50 years ago Was a middle man for investors buy certain types of stocks Was sentence to 150 years in prison on June 29, 2009.

Marcus Schrenker Indiana financial planner under investigation for fraud. Tried to flee from authorities by faking his death in a plane crash.

Mortgage Fraud Schemes Foreclosure Rescue Schemes: –As part of the "rescue," the homeowner will be required to deed the property to a new borrower who is often "investing" in a rental property, but who is really part of the scam. –The proceeds of the sale pay off the delinquent loan and the new borrower removes all the equity in the house, never to be seen again. –The distressed homeowner is now merely a renter in a home they no longer own, unaware that the new borrower is not making payments. –When the new borrower defaults on the loan, the homeowner is evicted from the home.

Advanced Fee Fraud Advance fee fraud gets its name from the fact that an investor is asked to pay a fee up front or in advance of receiving any proceeds, money, stock or warrants in order for the deal to go through. The fee may be in the form of a commission, regulatory fee or tax, or some other incidental expense. These secondary "advance fee" schemes work very similarly to boiler room operations, the difference being that an advance fee scheme generally targets investors who already purchased underperforming securities, perhaps through an affiliated boiler room, offering to arrange a lucrative sale of those securities, but first requiring the payment of an “advance fee.”