Firms May Offer Fraud Victims Little More Than False Hope for a Fee
Nashville, TN – The Tennessee Department of Commerce and Insurance’s (TDCI) Securities Division and the North American Securities Administrators Association (NASAA) are advising victims of investment fraud to use caution when approached by companies promising to help recover their money or bring the perpetrator to justice – for a fee.
Many of these third-party asset recovery companies are not law firms, although they may advertise that they can provide legal assistance.
“These companies give investors false hope that they will recover lost funds. In reality, the investment scheme is often so old that the company is either defunct or bankrupt, and recovery is very unlikely,” said TDCI Assistant Commissioner for Securities Frank Borger-Gilligan. “It pays to remember the old adage: ‘once bitten, twice shy’.”
Third-party asset recovery firms typically approach fraud victims through an unsolicited telephone call or email promising to recoup lost investment funds for an upfront fee. Once hired, the firm may send demand letters to the perpetrators of the initial investment scheme, then file a boilerplate complaint with state and federal regulators on behalf of the defrauded investor.
More information about third-party asset recovery companies is attached at the bottom of this story.
Often, the information contained in these complaints relates to companies that are no longer in business, have filed for bankruptcy, or have already been subjected to previous regulatory action. Sometimes the complaints are based upon information that is too old for legal action. In the end, the investor risks becoming victimized for a second time.
How to Protect Yourself
- If you find yourself the victim of investment fraud, contact the Tennessee Securities Division and file a complaint.
- Remember, most defrauded investors rarely recover any lost funds. If any money is recovered, it is usually only pennies on the dollar.
- Read the fine print of any contract for service before you provide the company your money. Ask for specifics on what services they are providing for the fee.
- Consider whether you can risk losing more money for the possibility that the company may not be successful in recouping anything on your behalf.
- If the firm alludes to providing legal services, such as filing a class action lawsuit, ask for the names and license numbers of the attorneys who work at the firm and verify their licensure with the appropriate state bar association or provincial equivalent.
To learn more about how to protect yourself from investment fraud, contact the Tennessee Securities Division at 1.800.863.9117 or visit our website.
About the Tennessee Department of Commerce & Insurance
TDCI is charged with protecting the interests of consumers while providing fair, efficient oversight and a level field of competition for a broad array of industries and professionals doing business in Tennessee. Our divisions include the Athletic Commission, Consumer Affairs, Tennessee Corrections Institute, Emergency Communications Board, Fire Prevention, Insurance, Tennessee Law Enforcement Training Academy, Peace Officers Standards and Training, Regulatory Boards, Securities, and TennCare Oversight.
