Sharp increase in investment fraud

In the last 4 to 5 years, investment scams have increased by several hundred percent. Many of these have been generated from Russia and in the spring of 2023, the Moscow Times reported that during the second half of 2022, the Russian Financial Supervisory Authority, together with the Russian Central Bank, had identified 965 attempted investment frauds, which was an increase of just over 300% from the corresponding period last year.

I, Lars Olofsson and my team of associates, who specialise in investigating investment fraud – and helping its victims – have been able to identify several reasons why these crimes have increased so much.

Why increase

The main reason is that in the vast majority of cases, the criminals have gone completely free, and the police have rarely been able to identify who is behind the crimes. The second reason is that people have had good access to saved money - and the capital that they have been able to use for investment has been extensive. The pandemic from 2020 to 2022 also had a clear impact. Many people were more or less under restrictions in their home, and they were out on the internet surfing to a large extent while the usual expenses for travel, entertainment and vacations did not exist, which meant that they had extra money to be able to invest. The fraudsters have also been good at creating Communities where people could have a social contact online with common interests, which also contributed to the fraudsters being able to attract their victims when they were now without the usual social contexts.

Not only are we seeing an increase in the number of investment scams, but also a large increase in the number of victims of each scam and an increase in the average loss lost by investors.

According to our observations, the fraudsters have become both more well-organized and more sophisticated, and it is clear to us that they have enlisted the help of behavioural scientists who have helped with how people act and react.

The Typical Victim

From all the thousands of clients we have all over the world, we have received good statistical data that shows that the victims come from all types of backgrounds, often have a good education and life experience, and that in many cases they have been victims of more than one investment fraud. It is not uneducated or inexperienced people who are the typical victim.

Money laundering

When talking about investment fraud, it is also important to add that almost all of these scams also involve extensive money laundering, which in some cases we have been able to show is three to four times larger in terms of money than the investment fraud itself. We have seen some examples where it is clear that the real purpose has been money laundering, and the investment fraud itself has only been a front for money laundering.

Broken families

In some countries, this fraud has had the effect of almost normalising fraud, and the fact that there are so many people involved in one way or another that it has changed the social order and social interaction. This is due to the fact that many investment scams are organized with investors recruiting family members, relatives and friends. This has led to people's social connections being destroyed and fragmented because entire families, relatives or circles of friends are recruited victims of crime and deep conflicts have arisen between these affected people.

Lars Olofsson, lawyer from Sweden investigating international investment frauds