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Tuesday
Dec072010

Investment Fraud on the Rise, Federal Officials Say

Photo Courtesy - Getty Images(WASHINGTON) -- On Monday, Attorney General Eric Holder and representatives from the FBI, Securities Exchange Commission and Commodity Futures Trading Commission announced the results of an operation that has been ongoing since August titled, “Operation Broken Trust,” which highlighted a series of arrests and cases targeting investment fraud. The cases announced Monday ranged from taking down Ponzi schemes and business opportunity fraud, to high-yield investment scams.
 
The round-up targeted 343 criminal defendants who scammed an estimated 120,000 victims.  The victims suffered approximately $8.38 billion in losses due to the fraud. One example cited in the press conference was Frank Castaldi, who targeted friends and people in his neighborhood in establishing a $77 million Ponzi scheme. One of the victims in the case, Frank Cesare, told local media at the time that he knew Castaldi and his family for 55 years, but lost his entire life savings to him.

FBI Executive Assistant Director Shawn Henry said, "The perpetrators of these crimes are those who you might trust -- hence the term Operation Broken Trust -- friends, colleagues, people you worship with, people in your workplace, people from your kid's soccer team. Criminals have always preyed on the trust of individuals, with offers too good to be true.”

Robert Khuzami, the SEC’s Director of Enforcement, said he feared these types of scams were on the rise: “I do think that we see situations, where as more and more people look to third parties to invest their money, through intermediaries, money managers and the like, you know, the frequency with which we might see these types of schemes arise, I think, is on the increase.”

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