Private placement program scam

When you look at it, they both have strong motives for each of their positions, but there is only 1 truth …. The problem is, they are extremely tough to screen, and even harder to succeed with. Over the last 10 years the once unknown private placement business has spread all over the internet, which has lead to a flood of inexperienced brokers into the market.

When you combine the recent increase in participation, with private nature of these programs, it can be a recipe for disaster if you are not properly informed. An individual is considered an accredited investor , if he or she:. Be cautious if no one besides the salesperson appears to be involved in the deal.

Usually, brokerage firms, accountants, law firms, or other third parties are involved in a private offering. Similarly, be cautious if you are told not to contact someone who is supposedly involved with the investment. A company may establish a mailing address within a state in which it has no legitimate operations in a fraudulent attempt to qualify for an exemption from registration. Any company, including limited liability companies and limited partnerships, seeking your investment should be listed as active or in good standing in the state where it was incorporated or formed.

Every company must file and pay annual taxes in order to maintain its good standing. Each state, usually under the offices of its Secretary of State, maintains a publicly accessible online database of its companies.

You should be very careful when you receive an unsolicited — meaning you did not ask for it — investment offer. Whether from a total stranger or from a friend, trusted co-worker, or even family member, always consider the motivation of the person offering the investment. Fraudsters often exploit the trust and friendship that exist in groups of people who have something in common, sometimes called affinity fraud.

You should be especially suspicious if you are told to keep the investment opportunity confidential or a secret. To appear legitimate, fraudsters may represent that they have had a successful career in the relevant industry when nothing could be further from the truth. Gideon Capital Management, Ltd. This site uses cookies. By continuing to browse the site, you are agreeing to our use of cookies. We may request cookies to be set on your device.

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Due to security reasons we are not able to show or modify cookies from other domains. Investors who buy shares in a yet to be created company are usually sellers on behalf of their clients, although they see themselves as new owners, while the corporation continues to pay ordinary dividends for its existing shareholders. Private placement program scam consists of all investment scams that involve the creation and use of false documentation to support fictional offerings.

Private placement program scam is the most widespread of all scams. One type, private placement program fraud is when an entity offers shares in a company that has not begun to market products or services yet.