There are so many budding entrepreneurs and business owners looking for an investment that convincing someone they should invest in you and your idea can be incredibly challenging.
Therefore, some people exaggerate how good their idea or product is. If all goes well, and you make a lot of money for everyone, then they are unlikely to complain. When things do not go so well, they might.
One famous example from the past few years is the CEO of Theranos, Elizabeth Holmes. A federal court found her guilty of lying to cover up the problems with her blood-testing product. It convicted her of three accounts of wire fraud and one of attempting to commit wire fraud. She is due to be sentenced in October of this year but could face years in jail as courts typically treat fraud very seriously.
There will always be some risk to investing
Not all companies people invest in will turn out as wonderful as they hoped. It is the risk they take. Therefore, even if someone accuses you of fraud, they still have a lot to prove for a court to convict you. For example, the prosecution would need to show:
- You gave someone something that you presented as facts.
- You knew that information was incorrect.
- They relied on those facts to make a decision.
- They lost money or suffered some other form of harm as a result.
That leaves many ways to contest their accusations. For example, you may have given them facts you knew were wrong, but if you can show they had plenty of other information to the contrary, you could argue they should not have relied on the information you provided.
You should not try to defend against fraud charges alone. Seek legal help to increase your chances of success.