Delaware Public Media

Annual DOJ survey lists top investor scams in Delaware

Dec 29, 2017

An annual survey by the North American Securities Administrators Association, of which Delaware's Department of Justice is a member, lists the most common threats to investors in Delaware.

It says the two most common threats to investors in Delaware are fraudulent promissory notes and phony real estate investments.

Delaware Investment Protection Director Gregory Strong says the state’s Department of Justice recently prosecuted a case in which the accused used both tactics. In the case, promissory notes issued to investors guaranteed profit from the rehab and sale of real estate.

“At the end of the day, the investment money that the investors put up was really used for the personal gain of the issuer, and not for the real estate projects that he had promised,” said Strong.

Other high-ranking threats to investors in Delaware are ponzi schemes, oil and gas investments, and affinity fraud. Strong says the DOJ is currently prosecuting a ponzi scheme case in which the defendant allegedly took in funds to pay for a mortgage business.

“But really what he was doing is keeping some of it and paying off some his earlier investors, without actually putting any of the money towards the business at all,” said Strong.

Strong warns Delawareans against investing online in things like cryptocurrency and crowdfunding, without doing the necessary research first.