Fraud Prevention for Private Investors

Fraud Prevention for Private Investors

The economic impact of business fraud in the U.S. is alarming. Empirical data has shown 53% of all companies lose revenue to fraud.

Certain types of fraud are well known. Accounting fraud represents most of the median losses on a per capita basis.  The perpetrators are typically trusted partners, executives, or CPAs.  It is also well known that the insurance industry incurs enormous losses due to fraud.

The immense losses the private investment community incurs due to fraud are rarely reported. The un-publicized fraud in the private investment industry may give investors a false sense of security. This may explain why so many private investors do not incorporate due diligence into their investment strategy.

Outside of the purview of SEC regulations and laws which govern securities, individual investors fall victim to valuation manipulation, internet fraud, accountant fraud, and many other schemes. These types of fraud are preventable. Private investors should consider hiring a forensic accountant to conduct a due diligence investigation during the final phase of any large investment.

As investors become increasingly involved in the booming startup tech communities, proper acquisition due diligence is essential to maximizing your ROI, managing risk, and preventing fraud.


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