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Commodities and securities fraud

Most Washington residents will know that the operator of a Ponzi scheme uses the funds received from new investors to provide returns to those who have already put money into the venture, but there are several other forms of commodities and securities fraud. Global financial markets are now more integrated than ever and provide investors with opportunities that would have been unimaginable just a few decades ago, but this transformation has also made it easier for some individuals to commit fraud.

Pyramid schemes work in much the same way as Ponzi schemes, but investors are offered additional money in the form of commissions for recruiting new participants. Some investment fraud is committed by trusted members of the community or religious or social groups who convince others to get involved by promising low risks and high returns. The fraudulent investments are often highly complex and difficult for a layperson to understand, and it is usually the trust that the participants have in the individual behind the scheme that allows this type of fraud to succeed.

While many fraudulent securities and commodities schemes work by duping participants and providing little or nothing of value in return, others involve conducting regular stock trades in ways that manipulate financial markets. The operators of market manipulation schemes generally buy over-the-counter stocks for pennies and then use high-pressure sales tactics to convince investors to buy the stocks also. This pushes the price of the shares up and allows the operators to sell at a healthy profit before the stock price crashes back down.

Cases involving white-collar crimes are often extremely complicated and can take several months or even years to resolve. This puts a tremendous strain on prosecutors with heavy caseloads and limited resources, and they could be willing to consider a negotiated plea even in situations where the evidence at their disposal seems strong. Experienced criminal defense attorneys may understand this, and they could offer prosecutors a speedy resolution in return for reduced charges or less severe penalties.

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