Critical Inside Information to Help You Prevail When Dealing in Financial Investigations by Sage Investigations

May 2022

Greetings!

We are grateful to have the opportunity to provide you with this valuable information via our monthly e-newsletter and our unparalleled forensic accounting, expert witness, and fraud investigative services.

The goal of this e-newsletter is to provide you with critical, inside information that will help you "follow the money" in business disputes, fraud cases, corporate embezzlement, and prevail when defending an IRS criminal case. We do this by sharing our knowledge from our 25+ years of experience as an IRS Special Agent and 25 years as a private investigator / forensic accountant.

We take special care to ensure the information we provide you in "The Beacon" is the latest and most current information available. This edition talks about the good, the bad, and the ugly of Cryptocurrency.

We want to write about topics that will help you prevail with business disputes, fraud, and IRS criminal 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 Board Certified Investigator (TBCI)

Cryptocurrency: The good, the bad, and the ugly

The Good

Cryptocurrencies (Crypto) such as Bitcoin, Ethereum, Litecoin, and hundreds more are hot commodities in online trading, and it’s possible for a smart investor to make a big profit^[1].

The Bad

The prospect of quick riches can blind individuals to the risks and enable scammers to lure them into a fraud scheme. Cryptocurrencies are not backed by the full faith and credit of any government or central bank, and their values change constantly. Crypto can be volatile, with market sentiment causing sharp and sudden price fluctuation.

Crypto blurs the good and bad lines and can increase your risk. “Crypto” can be used to buy goods and services, exchanged for U.S. dollars and other conventional currencies on digital markets, and even obtained at specialized ATMs. Crypto is capitalism at work (risk vs. reward), and the value of virtual currencies is driven entirely by supply and demand. At this time, Crypto investments allow an opening for fraud and theft of assets because they are operating ahead of regulatory protections afforded to traditional financial products like stocks, bonds, and mutual funds.

The Ugly

In the ACFE 2022 Report to the Nation^[2], 2,000 cases were studied from 133 countries and 23 industries, and only 8% of the frauds in the studies involved Crypto. ACFE proposes the numbers will rise significantly in the future. As Willie Sutton, a famous bank robber said, he robbed banks because “that’s where the money is.” Crypto robbers will follow because Crypto is where big money is, and there is less regulation.

The Federal Trade Commission (FTC) advised that crypto payments do not come with legal protections like your credit card. Crypto payments are not typically reversible; therefore, the buyer’s obligation is to KYC (know your customer). A Crypto purchaser does not usually have a means of getting their money back. Cryptos are being found in bribery and kickback schemes, drug dealing, human trafficking, money laundering, conversion of misappropriated assets, and assets hidden in divorce cases.

The FTC Consumer Sentinel Network 2021 Report ^[3] dated February 2022 received 5.7 million fraud reports with $5.9 billion in fraud loss. With younger people aged 20-29 losing 41% more than the elderly aged 70-79 losing 18%. From 2020 through 2021, they received 6,800 complaints of cryptocurrency investment frauds with over $80 million in losses. The 2022 report showed that Crypto reports were up to 38,711 complaints, with the reported losses growing to $750 million.

AARP states, “for cryptocurrency’s high-tech gloss, many of the related scams are just newfangled versions of classic frauds,” with Bogus Websites, Celebrity Endorsements, Pump & Dump, Ponzi, and Romance Scams. The methods of defrauding victims are the same, but the amount of money being stolen is growing exponentially.

If your law firm requires a private investigator or forensic accountant regarding cryptocurrency, hidden assets by high net worth clients, identity theft, or identity fraud matter, contact Chief Investigator Edmond Martin of Sage Investigations, LLC at 512-659-3179 or email him at edmartin@sageinvestigations.com. We offer a free 20-minute consult. Visit our website at www.Sageinvestigations.Com. Click to read about our team and their CVs.

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[1] https://www.aarp.org/money/scams-fraud/info-2019/cryptocurrency.html

[2] ACFE 2022 Report to the Nation

[3] FTC Consumer Sentinel Network 2021 Report

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At Sage Investigations, we are dedicated to serving our clients nationally to help them navigate the difficulties of dealing with fraud, divorce, estate and probate, the IRS Criminal Investigation, and other complex (forensic) financial fraud investigations. 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 reviewing, acquiring, and organizing financial records, evaluating the elements of their cases, and helping create winning strategies. Through the use of our proprietary advanced financial investigative technology, we trace and analyze complex financial data quickly, easily, and efficiently, saving our client's time and money.

Sage handles all cases with altruism, professionalism, honesty, integrity, passion, and respect. When you hire Sage, you hire a team of professionals with skills and knowledge that will help you have more effective solutions. We are innovative with our DIO cutting-edge technology. We perform every investigation in an orderly and organized manner to develop a clear investigative roadmap and deliver a quality work product. The compass that guides us is strong leadership and accountability. Learn more ...