Victims of COVID-19 Scams & Cybercrime Need to Act Fast

Victims of COVID-19 Scams and Cybercrime Need to Act Fast – FBI’s Financial Fraud Kill Chain May Recover Fraudulent Wire Transfers

Cybercrime is becoming ever more pervasive, and with so many more people working at home during the COVID-19 coronavirus pandemic, the risk of a fraudulent wire transfer and other financially motivated crimes is higher than ever.

Fraudsters use crisis events to target good-hearted investors.

The SEC and other federal and state regulatory agencies are paying close attention to COVID-19-related financial fraud, such as fraudulent stock promotions and unregistered offerings, charitable investment scams, and community-based financial frauds. Since February 2020, the SEC has suspended stock trading in connection with COVID-19 for at least 23 companies, and has initiated at least five emergency enforcement actions against companies seeking to exploit investors with false and misleading promises. These investment scams include fraudulent claims of N95 mask production, and manufacturing COVID-19 blood tests and thermal scanners for fever detection.

The FBI’s Financial Fraud Kill Chain:  A Resource for Recovering Stolen Funds

Unfortunately, while regulatory agencies work hard to shut down fraudulent scams, it can be difficult to impossible to recover money from the fraudsters.  Especially if the investor funds or cybercrime victim’s bank account funds have been transferred overseas. The Financial Fraud Kill Chain (FFKC), a program administered by the FBI, is a critically important tool that can cut off large international wire transfers. But victims need to act fast, within 72 hours of the wire transfer.

How does the Kill Chain work?

Financial fraud scams are often international, with unsuspecting investor money transferred from the United States to overseas financial institutions via international wire transfers through the SWIFT system. Cybercriminals hacking email accounts may use personal information to prey on individuals (“I’m traveling overseas and need money for a plane ticket home”). Businesses are also targets of cybercriminals. For example, corporate account takeovers and business e-mail compromise scams may be used to redirect legitimate wire transfers to fraudulent overseas accounts.

The Kill Chain utilizes the FBI’s international relationships to help U.S. financial institutions recover large international wire transfers. If the Kill Chain is activated, the FBI can prevent the withdrawal of stolen funds by cutting off the SWIFT transfer.

What kind of transfer qualifies to initiate the Kill Chain?

The FFKC can only be activated if:

  • The wire transfer is $50,000 or more;
  • The wire transfer is international;
  • A SWIFT recall notice has been initiated; and
  • The wire transfer occurred within the last 72 hours.

To initiate the FFKC process, you should immediately contact your local FBI field office and also notify your financial institution that originated the transfer. Because time is of the essence, call your local FBI office and fill out an on-line complaint through the FBI’s Internet Crime Complaint Center (IC3).

Providing the FBI with more information will allow the agency to respond more effectively, but all complaints should include the following:

  • Victim business name and address,
  • Transaction type, amount, and date,
  • Originating bank name and address,
  • Beneficiary bank name and address,
  • Beneficiary account number,
  • Beneficiary bank location (if known), and
  • Intermediary bank name (if known).

If you or your business has been the victim of wire transfer fraud, consider still reporting it to the FBI even if the fraud does not meet the above criteria to initiate the Kill Chain.

And as we all work to protect ourselves and each other during the coronavirus pandemic, COVID-19-related investments scams should be reported to the SEC and your state’s securities regulator

Darlene Pasieczny, AttorneyDarlene Pasieczny is a fiduciary and securities litigator at Samuels Yoelin Kantor LLP.  She represents clients in Oregon and Washington with matters regarding trust and estate disputes, financial elder abuse cases, and securities litigation. She also represents investors nationwide in FINRA arbitration to recover losses caused unlawful broker conduct.  Her article, New Tools Help Financial Professionals Prevent Elder Abuse, was featured in the January 2019, Oregon State Bar Elder Law Newsletter.

Down Markets – A Good Time to Look For Red Flags and Recoverable Investment Losses

The news has been full of stories of investment losses. First, it was cryptocurrencies and related investments on a roller coaster ride of valuation. Then, in the last week, the major stock market indices followed… Dow Jones, S&P 500, Nasdaq…

What is a Main Street investor to do?

As a securities attorney representing investors in disputes with the financial industry, down markets mean my phone starts ringing. Investors start to look closely at their portfolios.

Some find surprises. Potential claims against their financial advisor to recover investment losses.

Not every investment loss is a recoverable investment loss – far from it. But, sometimes investment losses are caused because of a financial advisor’s misconduct. Making unsuitable securities recommendations to buy risky investments or allocate a portfolio in a certain way. Failing to follow instructions, negligence, or outright fraud and misrepresentation.

The law provides remedies to investors injured by advisor misconduct. Typically, securities claims are brought by filing a statement of claim in FINRA arbitration. I’ve helped my clients bring securities claims in FINRA arbitration. I help them to navigate mediation and informal settlement discussions. And I have helped them recover millions of dollars, thought to be lost forever due to “bad luck”.

I recently filed some short video clips explaining how an experienced securities attorney like myself can help investors who think they may have a problem, and why investors may be hesitant to seek help and file claims to recover losses.

A down market is a good time to take a hard look at your, or your client’s, portfolio. And ask questions.

Why is the portfolio heavily allocated in one volatile sector, such as oil and gas?

Was that level of risk appropriate for the investor at the time of the recommendation? Why are there so many LP and LLC private placement interests in the portfolio? Can those interests be sold? And why are my investment losses in this down market so much more than my friend’s losses, when we have similar financial goals and risk tolerances? These and other red flags may be signs of investment fraud.

If you think you may be the victim of investment abuse, call me toll free at 1-800-647-8130 for a free, confidential initial consultation. I represent investors in FINRA arbtiration nationwide who have investment losses caused by the conduct of a financial professional or a defective investment product. I also represent parties in trust and estate disputes where a fiduciary has breached their duties and money is recoverable to the estate, trust, or beneficiary.

The Investor Defenders at Samuels Yoelin Kantor LLP help investors get their money back from brokerage fraud, fraudulent investments, elder financial abuse, and other situations. Our specialized investment litigation practice combines familiarity with complex financial modeling, experience with specialized FINRA arbitration rules and securities laws, and empathy for our clients whose investment losses have become personal.

If you have concerns about how your money is being handled by your financial professional, or concerns that you or a loved one might be the victim of financial exploitation, call me at 1-800-647-8130. Again, consultations are free, and confidential.

Darlene Pasieczny’s practice at Samuels Yoelin Kantor LLP focuses on all stages of corporate and securities law issues, securities litigation and FINRA arbitration, fiduciary litigation in trust and estate disputes, and complex civil litigation. Darlene’s practice includes representing investors nationwide in investment disputes through FINRA arbitration.

Six Hooks that Lure Investors

Do you ever wonder why fish end up hooked even after they’ve been caught before? When it comes to investments that sound too good to be true, humans are equally predictable. After a financial loss we can all be tempted by investments that promise quick returns. The following article, originally posted in the Journal Times, reminds us what to look out for and how we can protect ourselves from financial fraud and abuse:

Staying Sage: Older Investors Need to be Careful

We all worked hard for a long time to build our nest egg for retirement. However, the market has gone crazy recently, eating away some of the value. Further, current fiscal policy has severely lowered the return on safe investments like CDs, government bonds and municipal bonds. So we start looking around for ways to recover some of the losses and generate more current income. This makes us perfect targets for an investment scam.

The Hook

Scam artists are very good actors and psychologists. They have a variety of well practiced “pitches” that they match to the target. They can uncover your weaknesses by asking innocent questions and analyzing your answers. (Think of the TV show “The Mentalist.”) Once they have figured you out, they come at you quickly to confuse you and get you buy their product without thinking. Some of the most common tactics are:

• Big rewards/low risk: Usually centers on an investment you have little experience with (gas wells, shipping, commodities, etc.) The promise is big returns/high income stream with no risk. This never happens. High potential rewards ALWAYS have high risk.

• False credibility: Scam artists usually claim to be high level executives with reputable firms, or have special experience (worked with IRS, FTC, etc.).

• Everyone’s doing it: Claiming the savvy investors, including the guy on the phone, his mom, etc., are already in. Remember what your Mom said? “If everyone else jumped off a cliff, would you?”

• Barely legal: Gives you the impression that you get the big returns because they push the boundary of the law (maybe even, “wink, wink”, be slightly illegal).

• Limited availability: Gives you a sense of urgency that the opportunity will go away. Limited shares left, have to do it today … so you will act without time to think.

• Reduced commission: Often the last tactic they try. “Buy now, and I’ll cut my commission.” The seller is offering up a small percentage of what he is asking you to contribute.

Many times you have seen the statement, “If seems too good to be true, it probably is.” However, there is no definitive line between good and too good. The bad guys do a lot to confuse this issue. Many legitimate companies use the tactics described above, so you have to be careful. The big difference is that real deals will still be there tomorrow. You can take your time, get advice from trusted friends and advisors, and think before you act.

Protection Tactics

Some ways to avoid the problem:

1. Say “NO”: The easiest, safest way is to decide you will only deal with trusted, personally well known financial investment advisers, and no one else. With this decision already made, it is easy to tell the caller you are not interested and break contact.

2. Ask questions: If you want to hear them out, ask them questions before they can start getting information from you.

• Investment sellers must be registered, so ask who they are registered with: Financial Industry Regulatory Agency (FINRA), SEC, or Wisconsin Department of Financial Institutions (WDFI). Then tell them you will check FINRA (1-800-289-9999, www.finra.org), SEC (www.sec.gov 1-888-732-6585) and WDFI (1-608-261-9555, www.wdfi.org).

• Investment itself should be registered. Check SEC’s EDGAR database.

At this point, most of the time, they will hang up on you. If they don’t hang up, tell them you will check and talk to an advisor, and get back to them.

3. Talk to Someone Before you call back, talk to a trusted advisor. If the seller says you can’t tell anyone, run from the investment.

4. Remove your name from the lists:

• Telemarketing Calls: Federal, www.donotcall.gov or call (888) 382-1222

Direct mail and email

Credit card offers

Online cookie collecting

As with any scam, delay tactics are your friends. Take too much time, and the bad guy will go on to someone else. Remember, it’s your money; you worked hard for it, so protect it.