Now, we’ve all heard the saying that if something sounds too good to be true, that it probably is. However, not a month goes by that we don’t meet with a new client that got wrapped up into some type of fraud or investment scheme because they were pitched an idea that on paper sounded amazing, but turned out to be far from it. So what can you do to protect yourself in a situation like that? Stick around, and that’s what I’m talking about this week.
Happy Friday, everybody. Hope you’re all having a great week and looking forward to another weekend.
This week, I’m talking about investment deals that sound too good to be true. Now, everybody out there has this interest in making more money, earning more income for you, for your family to support what you want to do in your lifestyle, and that’s totally understandable. However, when you get pitched an idea or an investment opportunity, it’s always important that you vet it, that you look at it carefully, that you read the fine print, because sometimes you could get roped into something that you had really no intention of being in, and yet now you’re a part of a criminal fraud or you’re the victim of a criminal fraud.
When I sit down with people who have been pitched certain investment scams or certain investment plans, I should say, they don’t know it’s a scam, the important thing that I always talk to them about is you want to be able to consult with somebody that knows what they’re talking about. Here’s what I mean.
If somebody is pitching you an investment opportunity that has to do with real estate, then you need to sit down with a real estate lawyer, somebody that is familiar with the rules and regulations of how the real estate world works, because they will be able to look at that specific plan and tell you if it’s legitimate or not.
Likewise, if somebody is pitching you an investment opportunity in the healthcare industry, you need to sit down with a healthcare regulation lawyer, specifically somebody that is familiar with things like the Anti-Kickback Statute or the Stark Law, because those are very detailed, very nuanced types of law that no real lawyer that is not specifically in that field is going to know enough about to make a decision on whether or not this is a good investment opportunity or not. You generally want to speak with some type of tax lawyer if it has tax implications on how much you can give or how much return you see.
These are the types of lawyers that you want to sit down and talk with if you’re pitched with an investment opportunity. It’s not good enough, in my opinion, if you get handed an investment opportunity for let’s say healthcare, to sit down with a probate lawyer or your cousin, who’s a family lawyer, that’s typically not good enough. You need to sit down with a lawyer who really, really knows the business.
This is important for a couple reasons. First and foremost, it’s important because only that type of specialty lawyer is going to know enough about what that industry is, how it works and what the regulations are to give you an honest and accurate answer as to how safe of an investment it is, how legitimate of an investment it is, and if there’s anything illegal going on in the way that it’s structured.
More importantly, let’s say in a hypothetical situation, the worst comes to fruition and it turns out that this investment was a scam and your money was used to facilitate some illegal activities. The government takes a look at that, sees that it’s your money that is doing this illicit activity and indicts you or charges you with a crime. Now, there is a defense to committing this type of fraud, and that’s called the advice-of-counsel defense.
What that defense requires is that prior to you engaging in this opportunity, or prior to you entering into this agreement, you sat down with an attorney and fully disclosed all of the facts and circumstances surrounding it and they gave you the advice that it is okay for you to invest or be involved. That’s how you get an advice-of-counsel defense. Even if that attorney was wrong, even if that attorney said something was legal when it actually wasn’t, if you sat down with that attorney, filled them in on everything, did not hide anything from them, did not hold anything back, they looked at it and in their opinion what you’re doing is legal, even if it wasn’t, you have an advice-of-counsel defense that you could then use to try to defeat the criminal charge that the government is bringing against you.
Now like I said, in 99% of scenarios, you never have to get that far if you sit down with an attorney up front, because a good attorney who’s experienced and is specialized in that particular field is going to be able to spot that type of fraud or that type of activity from a mile away. So if you do everything you’re supposed to do, in most circumstances you’ll never have to worry about relying on an advice-of-counsel defense, but in the rare instance where you do that can be your lifesaver.
I was just in a federal trial a while back. It was a big white collar fraud trial. And one of my co-defendants, not my client, but one of the co-defendants, had an advice-of-counsel defense and was acquitted because of it. So it is defense that exists, that works. And so I highly suggest anytime you’re looking at an investment opportunity or something like that where you’re going to put your hard earned money into something expecting a return, sit down with a lawyer, have them look at it, have them vet it, have them make sure that it is something worthwhile and legitimate.
As always, if you have any questions about this or anything else, feel free to reach out via email or phone call. I’m getting a lot of questions on these videos. I’m glad to answer and talk to any one of you that calls or emails and wants to talk to me about something I said or something that you need clarified, I’m happy to do it. So give me you a call, give me an email, and I’m happy to talk to you then.
Thanks everybody for tuning in, and I look forward to seeing you guys next week.