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Types of Securities Fraud. Embezzlement. What Is Embezzlement?. KEY TAKEAWAYS. Understanding Embezzlement. How Embezzlement Works
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Types of Securities Fraud
Securities fraud takes on many forms. In fact, there is no shortage of methods used to trick investors with false information. High-yield investment fraud, for example, may come with guarantees of high rates of return while claiming there is little to no risk. The investments themselves may be in commodities, securities, real estate, and other categories. Advance fee schemes can follow a more subtle strategy, where the fraudster convinces their targets to advance them small amounts of money that are promised to result in greater returns.
Sometimes the money is requested to cover processing fees and taxes for the funds that allegedly await to be disbursed. Ponzi and pyramid schemes typically draw upon the funds furnished by new investors to pay the returns that were promised to prior investors caught up in the arrangement. Such schemes require the fraudsters to continuously recruit more and more victims to maintain the sham for as long as possible.
One of the newer types of securities fraud is Internet fraud. This type of scheme is also referred to as a " pump-and-dump" scheme, in which people use chat rooms and forums to spread false or fraudulent information concerning stocks. The intention is to force a price increase in those stocks—the pump, and then once the price reaches a certain level, they sell them off—the dump.
The FBI warns that security fraud is often noted by unsolicited offers and high-pressure sales tactics on the part of the fraudster, along with demands for personal information such as credit card information and Social Security numbers. The Securities and Exchange Commission (SEC) and National Association of Securities Dealers (NASD) investigate allegations of securities fraud. The crime can carry both criminal and civil penalties, resulting in imprisonment and fines.
https: //www. investopedia. com/terms/e/embezzlement. asp
Embezzlement
What Is Embezzlement?
Embezzlement refers to a form of white-collar crime in which a person or entity misappropriates the assets entrusted to him or her. In this type of fraud, the embezzler attains the assets lawfully and has the right to possess them, but the assets are then used for unintended purposes.
Embezzlement is a breach of the fiduciary responsibilities placed upon a person.
KEY TAKEAWAYS
· Embezzlement takes place when a person uses funds for a different purpose than they were intended to be used.
· Embezzlers might create bills and receipts for activities that did not occur and then use the money paid for personal expenses.
· Ponzi schemes are an example of embezzlement.
Understanding Embezzlement
The nature of embezzlement can be both small and large. Embezzling funds can be as minor as a store clerk pocketing a few bucks from a cash register. However, on a grander scale, embezzlement also occurs when the executives of large companies falsely expense millions of dollars, transferring the funds into personal accounts. Depending on the scale of the crime, embezzlement may be punishable by large fines and time in jail.
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How Embezzlement Works
Individuals who are entrusted with access to an organization’s funds are expected to safeguard those assets for their intended use. It is illegal to intentionally access that money and convert it to personal use. Such activities can include diverting funds to accounts that appear to be authorized to receive payments or transfers.
However, the account is a front that allows the individual, or a third-party they are collaborating with, to take the funding. For instance, an embezzler might create bills and receipts for business activities that never took place or services that were never rendered to disguise the transfer of funds as a legitimate transaction.
An embezzler might collaborate with a partner who is listed as a consultant or contractor who issues invoices and receives payment, yet never actually performs the duties they are charging for.
Types of Embezzlement
Some types of embezzlement might be combined with other forms of fraud, such as Ponzi schemes. In such cases, the embezzler scams investors to entrust them with their assets to invest on their behalf but instead uses the money for personal gain and enrichment. Maintaining the fraud often includes seeking out new investors to bring in more money to appease prior investors.
An embezzler might also transfer other assets aside from money. An embezzler might claim the real estate, company vehicles, smartphones, and other hardware such as laptops that belong to an organization for personal use.
Embezzlement might take place in the government sector as well if employees seize local, state, or national funding for themselves. Such instances may occur when funding is disbursed to fulfill contracts or to support projects, and a member of the staff skims some of the money that was earmarked.
https: //www. investopedia. com/terms/m/moneylaundering. asp
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