An investment fraud lawyer explains when misrepresentations are criminal
Misrepresentation refers to an assertion or manifestation not in accordance with the truth. Both words and conduct that obscure the true facts or create a misleading impression may be considered a form of misrepresentation.
Misrepresentation can be both a civil wrong (a tort) or a criminal wrong. If the misrepresentation rises to the level of fraud, a defendant can face serious legal consequences. Misrepresentation can occur in the creation of contracts and in many different industries. When misrepresentation involves corporate financial statements or facts about securities and commodities, misrepresentation may be classified as a type of investment fraud.
If you are accused of a securities fraud crime based on misrepresentations, you need to get legal help. Bukh Law Firm, PLLC can provide you with representation related to all of your legal problems arising from allegedly making false or misleading statements. Our New York City investment fraud lawyers have experience representing banks, investment advisors, corporate executives, and financial professionals accused of a variety of investment fraud offenses. Give us a call to learn how we can provide assistance with your misrepresentation case.
Types of Misrepresentations
Misrepresentations can occur in any context, but some of the common misrepresentations that can result in accusations of investment fraud include:
- Making false or misleading statements about the value of securities. This occurs commonly in pump-and-dump schemes. Investors purchase large amounts of microcap or penny stocks and then heavily market the pink sheet stocks using false statements. The investors make a massive profit and then dump the stocks, leaving investors in the lurch.
- Preparing false account statements. Financial advisors and brokers may provide false statements to obscure “churning“, or excessive trading to earn commissions. Brokers and investment advisors may also prepare false account statements and misrepresent the value of client accounts in cases where embezzlement occurs and client funds are stolen. Ponzi schemes also rely on false account statements to continue to lure investors.
- Misrepresenting potential risks and gains of an investment opportunity. Pyramid schemes are one of the most common areas where this type of misrepresentation occurs; however, misrepresentation can happen any time false promises are made about what an investment opportunity is likely to mean for buyers.
- Making false statements about a company’s financial condition. Corporate executives and board members may defraud shareholders and the public about the financial condition of a company by misrepresenting the truth about profits and losses.
These are just a few of many different types of misrepresentation that may occur in the financial sector. Intentional misrepresentation or fraudulent misrepresentation is very common when large sums of money are at stake, but serious penalties can follow if someone is caught in an intentional fraudulent misrepresentation scheme.
Bukh Law Firm, PLLC has provided assistance to clients accused of many different fraud schemes and we know misrepresentation law inside and out. We’re ready to put our legal experience to work for you.
When is Fraudulent Misrepresentation a Crime?
Innocent misrepresentation is not necessarily a criminal offense. The key to determining if you can be charged with a crime is whether the misrepresentation was intentional or knowing, and whether it was part of a larger scheme to commit some type of fraud offense. Fraudulent misrepresentation can be a violation of a number of different laws including:
- Sarbanes Oxley, which makes CEOs and CFOS criminally liable for certifying financial statements that contain misrepresentations.
- 18 U.S. Code Section 1348, which prohibits the use of false or fraudulent pretenses and misrepresentations in connection with a scheme or artifice to defraud related to securities or commodities trading.
- State and federal laws prohibiting theft and embezzlement. New York addresses the crime of embezzlement in Article 155, with penalties determined by the amount of money allegedly misappropriated.
- 18 U.S. Code Section 1341, which prohibits schemes or artifices to defraud by the use of false pretenses, representations or promises.
There are many different defenses that you can raise, including lack of intent to mislead and lack of awareness that the statements you made were false. A fraud misrepresentation lawyer can provide you with assistance in understanding your options for responding to charges.
How a Fraud Misrepresentation Lawyer Can Help
Do not try to handle a criminal or civil action related to fraudulent misrepresentation on your own- the stakes are too high and you could be facing a lengthy prison sentence. Bukh Law Firm, PLLC is here to help you fight the legal actions against you and try to protect your reputation, career, finances and freedom.
Call today to learn how we can represent you.
