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Fraud using the JOBS Act is alive and well, but don’t let it scare you away

Recent fraud charges, filed by the Securities and Exchange Commission against USA Real Estate Fund 1 of Spokane Valley, Wash., should serve as a reminder to investors that the JOBS Act, while presenting real opportunities, also creates a host of new ways for fraudsters to try to rip people off.

The recent charges filed by the SEC against USA Real Estate Fund 1 came after the company’s representative, Daniel Peterson, allegedly told potential investors that they could invest their money into companies that would be a “sure thing” because the JOBS Act had lifted the ban on general solicitation. However, because the JOBS Act is still in the regulation definition process, that ban has not yet been lifted, although it will be sometime down the road and Peterson, it was discovered, did not have any real investment product at all. From there, Peterson allegedly collected investor monies and used them to finance his personal life.

Although the SEC charges against Peterson did not indicate he violated any JOBS Act provisions, the investors’ money has all but disappeared with no actual investments ever having been made and no hope of a return. Many investor advocates are concerned that the lifting of the ban on general solicitation will create a perfect storm for fraud against an unsuspecting public.

We think the risks are real. There always have been and always will be people who try to take advantage of peoples’ lack of information and greed to try to scam them. Whether it is a boiler room operator trying to push a penny stock or a purported widow of a Sub-Saharan prince trying to get money out of her country, financial fraud is alive and well and perpetrators will use any means available to them to try to separate victims from their money.

However, Accredited Investor Markets believes that real opportunities will come to exist under the JOBS Act and that the bad conduct of a few is not cause to stick your head in the sand and simply stay away. Accredited Investor Markets exists to help educate investors and, with that knowledge, facilitate wise investments that yield better returns with less overall volatility.

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