Investor-Fraud-What-Can-You-Do-When-Someone-Makes-Off-With-Your-Money.jpg (4297×2317)Investor fraud can come in a wide variety of forms, but the central theme is basically the same: you entrust your money to another party who you believe to be making the best investment decisions with it, but instead they betray your trust and take it from you.

The Financial Fraud Research Center estimates that annual losses to fraud can range into the tens of billions of dollars in the United States alone. Unfortunately, these estimates are probably even lower than the actual number, as fraud victims sometimes do not report the crime out of embarrassment or in the errant belief that nothing can be done about it.

In today’s post we’ll discuss some of the major forms of investment fraud that are commonly seen, and what you can do to recover some or all of your lost money.

Bernie Madoff became the public face of the Ponzi scheme when he bilked clients for almost $65 billion dollars in total, setting the kind of record that you don’t really want to go into the history books for. What he did was the classic example of the scheme; instead of growing the investments of his existing clients, he simply paid them small dividends out of the investment money of a stream of new clients while also providing falsified reports indicating they were making more than they really were.

Madoff’s long-running scheme was brought down by an extended recession, but most smaller operators will simply take all the money they have on hand and vanish after a certain point. The scheme can also come crashing down unexpectedly if enough investors decide to withdraw their funds all at once.

Ponzi schemes are particularly insidious because they don’t necessarily start out as an attempt to defraud clients. Legitimate hedge funds sometimes turn to Ponzi tactics out of desperation if the fund doesn’t perform as well as expected. Regardless of the circumstances, however, it is illegal under California law and the operators can potentially do state prison time for it.

According to the law, you’re only supposed to make stock transaction decisions based on public knowledge, like company press releases or earnings statements. If you use knowledge that is only available behind a company’s closed doors to make a decision to buy or sell their stock, that constitutes insider trading (as this practice would destroy the viability of the stock market if it was legitimized).

Martha Stewart put a face on this particular form of investment fraud when she was sentenced for dumping shares of her investments in ImClone in 2001. Stewart had learned that the FDA was going to reject ImClone’s cancer treatment drug several days in advance of their public announcement, and used that knowledge to sell her stock before the public became aware and the company’s value plunged.

Unfortunately, if your investment or hedge fund manager is caught engaging in insider trading, it can cause problems for you. You won’t be charged for moves that they made with your money, of course, but you can potentially end up losing access to your money in the short term or even losing some permanently in the long run. The responsible parties may also choose to flee with the funds they have on hand rather than face the music if they know insider trading charges are coming.

Up until recently, SEC regulations basically made it so that you had to be relatively wealthy to invest in a private company. As of 2016, it became possible for people with more ordinary budgets to get in on this sort of investment, but only through “equity crowdfunding” platforms that have to register with the SEC and meet their criteria.

Long story short — if you’re being offered a piece of a private company before it goes public and it’s not part of a crowdfunding effort at one of the roughly 20 or so registered Reg CF platforms, it’s a scam.

In this scheme, the fraud perpetrators will buy up a bunch of inexpensive stock, and then spread false information through various means that causes members of the general public to invest heavily in it. While the stock is at peak value (before the falsehood is detected), the fraudsters sell all their shares for a profit. The innocent people who bought stock based on their false information are left holding their loss. This is a serious federal crime.

These are hardly all of the forms of investment fraud, but some of the most commonly seen. If you’ve been hit by an investment fraud scheme, the good news is that it is often possible to recover money. Aiman-Smith & Marcy is an experienced Bay Area law firm with long experience in “clawback cases” of this nature. Contact us for a free, no-obligation review of your circumstances; we don’t charge fees unless we recover money for you.

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Lisseth Bayona


Education and Background

I am a Los Angeles native and daughter of Salvadorian immigrants. From an early age, my parents instilled the value of hard work and education in me and my two siblings. Their perseverance enabled each of us to graduate from college and earn professional degrees.

My interest and commitment to workers’ rights have roots in my parents’ experiences as undocumented workers in Los Angeles. Witnessing the challenges they faced inspired me to pursue a career where I can help individuals confronted with similar struggles. To help someone in those moments is very satisfying. I love connecting with people and learning about their stories. I believe that dignity in the workplace is a right of all workers, not a convenience or privilege reserved for employees of a certain race, gender, age, sexual orientation, or gender identity.

Legal Experience

I received my J.D. from the University of Southern California (USC) Gould School of Law. While there, I served as a judicial extern to the Honorable Patrick J. Walsh of the United States District Court for the Central District of California, where I drafted a criminal judicial opinion. Also, while at Gould, I served as an extern for the U.S. Attorney’s Office for the Central District of California. As a Criminal Division Extern, I had the opportunity to work closely with a trial team of Assistant U.S. Attorneys on a money laundering case which further sparked my interest in litigation.

Personal Interests

In my free time, I enjoy urban vegetable gardening, traveling, and spending time with my nephew and niece. I also love to spend time at San Onofre Beach learning to surf, although admittedly, I am not very good.



Hallie L. Von Rock

Attorney (SBN 233152)

Education and Background

I moved to the Bay Area from Washington after graduating high school. I had been accepted to UC Berkeley through a program where I could defer for two years while getting my California residency and attending community college, which was significant since I was paying for college on my own. I began working for Randall Aiman-Smith and Reed Marcy in 1996 as an office manager while taking night classes. My first foray into the legal world was soon after starting at the firm when I was ready to transfer to UC Berkeley. Rather than accepting my resident status, the Board of Regents took the position that California residency required a student to be in California “two calendar years.” Randall and Reed took up my case with the same verve as they helped their actual clients and I got the chance to comb through the UC Berkeley library to read their codes and regulations to support my position. In that experience, I learned what is was like to feel helpless against a big organization and then to have dedicated attorneys in my corner to take up my cause.

After a break to pursue my major in art history, I went to UC Hastings College of Law and continued working with Randall and Reed. Having worked together now for over 25 years, we have a unique ability to work collaboratively and finish each other’s sentences. I have strived throughout my career to make a difference in the lives of our clients. At the end of the day, if I am helping someone to get compensation for losses they suffered, then I know that all the work put into a case has been worth it.

Legal Experience

I have extensive experience in civil litigation and class action cases, including conducting discovery and depositions, calculating damages analysis, preparing motions for certification, writing appellate documents, and overseeing claims administration. We have handled several class actions against retailers where plaintiffs claimed they were forced to purchase clothing to wear to work and were not compensated for these purchases, including against Abercrombie & Fitch, Hugo Boss, Armani Exchange, Uniqlo, Dollar Tree, and Ross. Recently, I was trial counsel in a defamation claim against Bank of America on behalf of a former employee who claimed the Bank blacklisted her with future employers. The jury found Bank of America liable, including for punitive damages.

Personal Interests

Aiman-Smith & Marcy has sponsored me in the Boston Marathon and New York Marathon. When I race, I often wear a “Rockstar Ronan” shirt to support research for childhood cancer through The Ronan Thompson Foundation.


University of California, Berkeley, B.A., 1999

Hastings College of the Law, University of California, J.D., 2004

Randall Aiman-Smith

Abogado (SBN 124599)

Aiman-Smith & Marcy. Oakland consumer fraud attorneys.

Educación y antecedentes

Fui afortunado. A pesar de no haber terminado la escuela secundaria o la universidad, pude -aunque con mucho trabajo- ser admitido y sobresalir en una de las mejores escuelas de derecho del país: La Facultad de Derecho de la Universidad de Berkeley. Mientras estuve allí, tuve el privilegio de ser editor de la California Law Review y miembro del Moot Court Board, asesorando en la redacción de escritos y en la defensa de apelaciones a otros estudiantes. Después de salir de la escuela de derecho, en mis primeros años de práctica, enseñé la escritura legal y la defensa de apelación en la Universidad de California, Hastings College of the Law. También, a lo largo de los años, he sido presentador en eventos de educación legal continua.

Experiencia legal

He sido abogado durante 35 años. He dedicado mi práctica exclusivamente a representar a empleados, consumidores e inversores en los tribunales estatales y federales de primera instancia y en los tribunales de apelación. Me gusta ir a los tribunales por mis clientes y he llevado muchos casos con jurado en los tribunales estatales y federales.

¿Ejemplos? En 2010, fui la abogada principal, junto con los otros abogados del bufete, en el caso Williams v. Union Pacific Railroad donde, después de cuatro años de preparación, el bufete obtuvo un veredicto del jurado de 1.670.000 dólares para una empleada afroamericana. En Rivero v. Surdyka, fui el abogado principal en el juicio y la apelación de un caso de derechos civiles que duró 15 años, incluyendo un juicio completo y tres apelaciones al Noveno Circuito, concluyendo finalmente con una sentencia para los demandantes de más de 2.300.000 dólares. Estos casos ilustran el lema del bufete: compromiso – resultados. Hay que comprometerse con un caso, a veces durante mucho tiempo, para obtener el resultado que el cliente merece.

No siempre ganamos en el juicio. Cuando eso ocurre, el compromiso significa llevar el caso al siguiente nivel y recurrirlo. En el caso Rivero, antes mencionado, eso fue lo que ocurrió: el tribunal desestimó el caso -habíamos perdido- pero apelamos y conseguimos una victoria para nuestros clientes que mantuvimos a través de dos apelaciones más. Desde entonces, el bufete ha conseguido muchas victorias en apelación que reivindican los derechos de los empleados y los consumidores.

A lo largo de los años he sido abogado de los demandantes en numerosos casos individuales y acciones colectivas. Puede sonar cursi, o difícil de creer, pero después de todo este tiempo, y después de todas las grandes experiencias que he tenido, mi parte favorita de ser abogado es cuando consigo dar un cheque a mi cliente.



Facultad de Derecho, Universidad de California, Berkeley, J.D., 1986