Unscrupulous actors may make misleading statements, use deceptive behavior, or produce falsified statements or documents to induce you to invest in what you are led to believe is a legitimate business opportunity – from real estate investments to commodity sales. Bitcoin mining is a common target for fraudulent activity, as the burgeoning cryptocurrency market attracts new investors into crypto-mining equipment, data centers, and hosting services.

Legal Claims to Fight Investment Fraud

If you are the victim of investment fraud, there are various legal claims (also called “causes of action”) you can raise before the courts to pursue the recovery of your investment. The attorneys at Hendershot Cowart P.C. can review the facts and recommend the best causes of action for your matter.

Some common claims in investment fraud cases include:

• Breach of contract. Whether your agreement was oral or written, or the terms were expressed in a Letter of Intent, you can petition the courts for damages for breaking the terms of that contract.
• Fraudulent misrepresentation. To prove fraudulent representation, you must show that a false statement or representation was made, the defendant knew their representation was false, the plaintiff relied on that false representation and suffered harm as a result.
• Unjust enrichment. Unjust enrichment is similar but usually occurs when one party is “enriched” or receives money in exchange for fulfilling their end of a contract or business agreement, and then does not.
• Civil theft is a violation of the Texas Theft Liability Act, a law passed in the 1980s to give victims of theft (especially when the theft occurs as a result of deception) a civil cause of action to pursue financial damages as well as collect statutory fees.
• Conversion is the “unauthorized and wrongful assumption and exercise of dominion and control over the personal property of another to the exclusion of, or inconsistent with, the owner's rights.” This cause of action applies when a defendant uses a property or asset (including cash) for other than its intended purpose.
• Deceptive Trade Practices Act (DTPA). If the defendant failed to disclose information to induce the plaintiff to purchase or lease goods or services, the defendant may be sued under the DPTA, a Texas law intended to protect consumers.

How Can You Recover Your Defrauded Investment?

Once you prove your claim, what are the available remedies? In any legal action involving fraud, you may request relief in the form of court-ordered injunctions and the recovery of your investment, as well as damages, punitive damages, and attorney’s fees and expenses:

1. Monetary relief may be awarded by the court to compensate plaintiffs for their damages.
2. Punitive damages go beyond compensatory damages and are awarded at the court’s discretion when the defendant’s behavior is found to be especially harmful.
3. Attorneys’ fees and costs can be recovered in addition to damages when the defendant is found to have breached a contract.
4. Injunctive relief stops the defendant from selling, destroying, or accessing assets secured by the plaintiff’s investment, or other injurious behavior.

Warning Signs of Investment Fraud

If an opportunity sounds too good to be true, it probably is. Similarly, investments are never guarantees, so if someone promises you something without explaining the risks, you should not invest.

Other red flags include:

• Requesting non-refundable deposits;
• Rescheduled or delayed meetings or site visits;
• Redacted lease or purchase agreements with dates and details hidden;
• Reluctance to produce legal documents to support claims; and finally – and most – worrisome,
• Inconsistent or no communication through usual channels.

In addition, the U.S. Securities and Exchange Commission offers these red flags for fraud and common persuasion tactics used by fraudsters.

Bad actors use different tactics to trick different people, and no one is too smart to be fooled. Even after investigating and vetting the opportunity, you may not discover the fraud until it is too late, especially in less regulated industries like cryptocurrency.