OCTOBER 2015
In This Issue

 

 
The goal of this e-newsletter is to provide you critical, inside information that will help you prevail when defending an IRS criminal case. We will do this by sharing the knowledge we have from our 25+ years of experience as an IRS Special Agent. 
 
We are grateful to have the opportunity to provide you this valuable information via our monthly e-newsletter and our unparalleled forensic accounting and investigative services.
 
We take special care to ensure the information we provide you in "The Beacon" is the latest and most current information available.
In this edition, we have addressed how promissory notes sold as safe investments can be a scam. You must be skeptical because fraudsters across the nation continue to use promissory notes as vehicles to defraud investors out of hundreds of millions of dollars.
  
We want to write about topics that will assist you in prevailing with criminal IRS cases. Please e-mail us your topics of interest to Thebeacon@sageinvestigations.com. 
 
We encourage you to share our e-newsletter with others in your sphere of influence.
 
Sincerely,
 
Edmond J. Martin
 
Principal, Chief Investigator
Certified Fraud Examiner (CFE)
Texas Certified Investigator (TCI)
Be Skeptical about Promissory Notes Sold as Safe Investments

In April 2009, the Securities and Exchange Commission issued a notice to investors entitled, Broken Promises: Promissory Note Fraud (U.S. Securities & Exchange Commission 2009).The notice defines a promissory note as a form of debt-similar to a loan or an IOU-that a company may issue to raise money. Typically an investor agrees to loan money to the company for a set period of time. In exchange, the company promises to pay the investor a fixed return on his or her investment-customarily, principal plus annual interest. While promissory notes can be legitimate investments, those that are marketed broadly to individual investors often turn out to be scams.
 
Fraudsters across the nation continue to use promissory notes as vehicles to defraud investors out of hundreds of millions of dollars. Most promissory note scams follow predictable, fraudulent fact patterns.
  1. The fraudsters-who may or may not be affiliated with the borrower-persuade sales personnel to sell promissory notes, luring them with lucrative commissions of up to 20 or even 30 percent. These agents often do not have a license to sell securities. In selling the notes, they frequently rely solely on the information provided by the company, which is intentionally misleading to the investor.
     
  2. Investors purchase the promissory notes, enticed by the promise of a high, fixed-rate return-upwards of 15 or 20 percent-and a very low level of risk. The promissory notes may appear all the more attractive because the seller falsely claims that they're guaranteed or insured. Few investors ask tough questions about these investments because they know and trust the sellers with whom they've done business in the past.
     
  3. The fraudster uses a portion of the money they collect from investors to pay the sellers their commissions and abscond with the rest.
     
  4. They may also use some of the proceeds to support an elaborate Ponzi scheme in which money from the sale of new notes pays the interest to investors on older notes. Some fraudsters make prepayments of interest and also try to avoid repaying investors' principal by convincing investors to "roll-over" their promissory notes upon maturity. These investors may, for at least a time, continue to receive interest payments. However, they rarely get their principal back.
Promissory note scams often target the elderly, bilking them of their retirement savings and their home equity at a time when they can least afford to lose it. No one is immune to scams. Fraudsters rarely discriminate when it comes to separating investors from their money. Most investors don't even realize their investment dollars are at risk until it's far too late.
 
Case Scenario:

Investors were lured by a trusted friend and sales person to invest in First and Second
... Read More 
 
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At Sage Investigations we are dedicated to serving our clients nationally, to help them navigate the difficulties of dealing with the IRS, and other complex (forensic) financial fraud investigations both civil and criminal. By narrowing our focus to our primary strength of following the money, we steer our knowledge, efforts, and experience to financial issues. We help our clients propel their cases forward by assisting in the review, acquisition, and organization of financial records, evaluating the elements of their cases, and helping create winning strategies. Through the use of our proprietary advanced financial investigative technology we analyze complex financial data quickly, easily and efficiently, saving our client's time and money.

 

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