Boiler Room Fraud
If you have been deceived into investing in securities that you later found to be non-existent, you may have been a victim of boiler room fraud. Often beginning with a ‘cold-call’, this type of fraud has, unfortunately, been around for a while and has caused millions in losses.
Chances are high that if you have been a victim of boiler room fraud, you are already facing considerable loss. The damaging thing about this kind of fraud is it often ends up deceiving honest folk into putting their life savings into non-existent or worthless shares.
The good thing though is if you have been a victim of this fraud, you may be able to pursue damages against the responsible party. As an investor, there are laws that protect you from being subject of fraud or deception by fraudsters acting as financial advisors. The law provides you with a right to take action against the party that caused you harm and recover fair compensation.
If you have decided to pursue compensation for your loss, attorney Irwin Weltz can help you bring the responsible party to account. With over 25 years’ experience representing parties in securities litigation and arbitration hearings, he has the skills and experience to help you recover fair compensation.
Boiler Room Fraud in New York
The first thing you should know about boiler room fraud is it’s not your fault that you were deceived. It is the usual practice of individuals perpetrating boiler room scams to operate in such a manner that they are very difficult to refuse.
Boiler room scams are illegal, high-pressure operations that work towards only one thing. They try to convince unassuming investors to buy worthless or even non-existent shares.
They are very sophisticated operations that often involve fraudsters pretending to be stockbrokers. The operation could even involve a network of actual stockbrokers and company executives.
These scams usually begin with a ‘cold-call’ from a stranger you have never been in contact with. The stranger, posing as a seller of shares or other securities, talks up the value of the securities. At the same time, they discourage outside research. They then a false sense of urgency by stating that there is a narrow window of opportunity to invest. Once the victim falls prey to the scam, the fraudster would usually become mysteriously unavailable.
Boiler room scams often require complex investigation. They may even involve multiple prosecution agencies at the same time. Just as unassuming individuals can be drawn into the scam, legitimate professionals and businesses can also fall prey.
In such instances, it will also be necessary to investigate the legitimate business or professional.
Boiler Room Fraud can be Costly
Boiler room fraud unfortunately leads to serious loss for victims. FSA statistics disclose that the average investor loses in may exceed 10’s of thousands of dollars to boiler room scams. Although several steps have been taken to try and combat these scams, many continue to fall victim.
In one recent case, dozens of investors were swindled in a $147 million dollar New York stock manipulation scheme. Sadly, a good number of the targeted investors were seniors and unsophisticated investors. The scheme, running from 2013 till 2016, resulted in the significant loss of life savings on the part of the victims.
Investors are Protected From Boiler Room Fraud
There are several laws and regulations in operation that protect investors from fraud. oOne of these such protections include the New York Martin Act and the federal Securities Exchange Act. These statutes specifically prohibit securities fraud. They even provide for criminal punishment in the event of fraud.
A person found guilty of securities fraud under these laws may be punished with the imposition of hefty fines and jail time. Importantly, these laws also provide for restitution once a fraudster has been found guilty. This means that you may be able to substantially recover whatever amounts you were defrauded of.
Apart from the provisions of these statutes, you can pursue redress for boiler room fraud under common law legal principles. By reason of these principles, it is possible to maintain a civil action for fraud against the party responsible for your loss.
The position of the law is that when a person has used false or misleading statements to induce another into taking an act, they will be responsible. Under this law, you can hold individuals that are not financial experts responsible for their fraud. And if the ones responsible for your loss are brokers or financial advisors, they may be open to further action.
How to go About Recovering Compensation
Boiler room fraud cases can be quite complex. It will first be necessary to trace the individuals that perpetrated the fraud. Since the fraudsters do not operate under their real identities. Due to this, the task of finding them will require the input of prosecution agencies and experts. If they have been caught by law enforcement, this task will be that much easier.
It doesn’t end there though. Your case may require collaboration with forensic accountants. Other experts may also be needed to trace and recover your assets. Often, the fraudsters would immediately try to hide the proceeds of their fraud. This would make it difficult to recover those funds. The process may involve having the accounts of the responsible parties frozen, even if they have set up a company with fake information.
How Long do You Have to File a Claim?
You won’t have an indefinite amount of time within which to file your claim. Under New York’s Martin Act, action could be brought against parties responsible for fraud within 6 years of the fraud. But this position has changed according to the New York State Court of Appeals. According to this 2018 decision, lawsuits brought under the Act must now be filed within 3 years of the fraud.
Apart from this, civil claims brought under common law fraud must also be filed within 3 years of the fraud. If your claim is not filed before the end of this period, you may be barred from filing any lawsuit against the responsible party. This will mean that you may be left without compensation. As such, it is important to act timeously as soon as you suspect that you have been a victim of boiler room fraud. The sooner you contact a skilled boiler room fraud lawyer, the better your chances of securing proper compensation parties in securities litigation and arbitration hearings.
Contact a Seasoned Securities Arbitration and Litigation Attorney
Investors often face substantial losses due to boiler room fraud by the broker or brokerage firm. If you suffered financial harm due to boiler room fraud, it is vital to confer with a securities attorney regarding whether you may be able to recover compensation. New York based attorney Irwin Weltz at Weltz Law has represented parties in securities litigation and arbitration hearings for more than two decades. Attorney Weltz will work tirelessly to help you pursue compensation for your losses. You can contact us at 877-935-8952 or through our online form to set up a conference to discuss your case.