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A Comprehensive Look at Fraud Identification and Prevention by James R. Youngblood

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Chapter 5
Investment Fraud
5.1 Introduction
Many people lose money to fraud because they respond to unbelievable opportuni-
ties presented in unsolicited e- mails; these e- mails offer a large payment for simple
participation. Others respond to letters or fake lottery award notices that offer a
cash payment for a simple up- front fee. People have also fallen victim to fraud by
participating in work- at- home schemes, telemarketing fraud, or advance fee fraud.
Many of these fraudulent crimes require an active participant and an oppor-
tunity created by a person or group looking to commit fraud. Based on the type
of fraud targeted toward the consumer, the individuals committing the activity
can cast a wide net with the hope of catching as many fish as possible. e payout
from the individuals acting as willing participants in what initially comes down to
an opportunity to “get something for nothing” is drawn in by the money- making
potential. Basically, minimum development is required of the criminal to attract
the targets; the criminal then waits for a positive response from the intended target
audience. e attraction for the targeted audience involves an impressive monetary
reward for little participation.
With investment frauds, the individuals putting the schemes together must be
somewhat more detailed in the hope of a larger monetary return. In basic consumer
fraud, the victim will provide money as part of the scheme, and contact is broken
off by the person who initiated the fraud. Investment schemes require more up-
front involvement of the criminal during the development process. is includes
coming up with a convincing money- making attraction that actually provides a
rate of return for the initial participants.
e “too- good- to- be- true” money- making endeavor, which actually provides a
return for initial investors, provides an increased attraction level to those offered

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