There are laws against fraud at both the state and federal level. Those accused of manipulating others for financial gain might eventually face criminal charges. Frequently, fraud charges and other white-collar crimes lead to federal prosecution.
The use of federal infrastructure or a fraud scheme that crosses state lines might warrant federal charges instead of state charges. Those accused of a federal criminal offense face harsh sentencing guidelines and long-term career setbacks if they plead guilty or get convicted at trial. The three types of fraud below are often prosecuted at the federal level.
Pump and dump schemes
The internet has made it easier than ever before for those with malicious intentions to manipulate the financial conduct of others. Pump and dump schemes involve influencing public opinion to create excitement about a particular company or stock opportunity. The goal is to motivate as many people as possible to invest so that those who have already invested can sell for a premium price. They then offload their holdings and avoid taking a loss, while those who fell victim to their misinformation scheme might lose their investments.
Ponzi schemes
Those seeking to invest personal capital often want the highest rate of return possible. Ponzi schemes capitalize on the desire for high returns by tricking people into investing with a professional or a certain investment fund. Instead of actually investing capital, those orchestrating a Ponzi scheme use funds contributed by new investors to artificially convince prior investors that they procured high returns on their investment. Ponzi schemes are notorious for depriving a large number of investors of their resources when the scheme falls apart.
Mortgage fraud
Both those applying for mortgages to secure housing and those involved in the real estate industry can end up accused of mortgage fraud. Sometimes, mortgage brokers convince applicants to falsify information and do not validate the details that they include on their mortgage applications. Other times, those seeking mortgages complete false transactions in a scheme seeking money, not housing. Mortgage fraud violates federal statutes and could very easily lead to federal prosecution for both the party seeking the mortgage fraudulently and any professionals knowingly involved in that process.
Federal fraud charges can lead to incarceration and orders of restitution. Fighting back against federal criminal charges may lead to a better outcome than pleading guilty and hoping for mercy from a judge. Those who respond assertively to allegations of financial misconduct may have a better chance of mitigating possible consequences than those who give up and plead guilty right away.