Understanding the Line Between Risky Deals and Criminal Intent
Not every investment goes as planned; it happens. Markets shift, partners fall through, and ventures fail—often for reasons no one could have predicted. But in today’s climate of heightened scrutiny and litigious fallout, failed investments are increasingly being framed as criminal fraud.
If someone lost money in a deal you were involved in—especially as an executive, broker, founder, or financial advisor—you may find yourself accused of intentionally misleading them, even if your intent was never malicious.
At Simmons & Wagner, we defend entrepreneurs and professionals who’ve been unfairly accused of fraud following failed business ventures. As former Orange County District Attorneys, we know how prosecutors build these cases—and how to dismantle them before they destroy your reputation, your business, or your freedom.
Failed Investment ≠ Fraud (But It Might Look Like It)
Investments inherently involve risk. But when people lose money, especially significant sums, they often look for someone to blame.
That’s where criminal allegations sometimes arise, such as:
- Wire fraud
- Securities fraud
- Investment fraud
- Grand theft or embezzlement
- Conspiracy to defraud
These charges may stem from nothing more than a bad outcome and a disgruntled investor.
What Prosecutors Look for in These Cases
To be charged with business fraud related to an investment, prosecutors typically must show that you:
- Made a material misrepresentation or omission
- Knew the statement was false or misleading
- Intended to induce someone to invest based on that statement
- Benefited from their reliance on it
In other words, it’s not about the investment failing—it’s about whether you knowingly deceived someone to get their money.
Common Scenarios That Trigger Charges
Even if you acted in good faith, certain behaviors can appear suspicious in hindsight. For example:
- Overpromising returns in investor pitch decks
- Downplaying known risks or failing to update investors on setbacks
- Using investor funds for personal or unrelated business expenses
- Failing to repay a loan or distribute equity as agreed
- Failing to disclose pending lawsuits or liabilities
- Misrepresenting credentials, partnerships, or assets
Often, these are the result of miscommunication, poor recordkeeping, or business naivety, not criminal intent. But that distinction must be aggressively defended.
How Simmons & Wagner Defend These Cases
As former prosecutors, we understand how fraud cases are built—and more importantly, how to tear them down. Our defense strategy includes:
- Establishing your good faith: Showing that you genuinely believed in the venture and worked to make it succeed
- Challenging the narrative: Pushing back on the idea that failure equals fraud
- Proving informed consent: Demonstrating that investors knew the risks and still chose to participate
- Attacking causation: Arguing that market forces—not deception—led to the loss
- Highlighting documentation: Contracts, emails, financials, and disclosures that tell the full story
We also work to mitigate reputational fallout, especially for professionals who hold licenses, operate businesses, or serve in public roles.
Red Flags That Your Investment Dispute May Turn Criminal
You should contact a business fraud attorney immediately if you:
- Receive a subpoena or formal complaint
- Learn that an investor has contacted law enforcement
- Are sued in civil court for fraud or misrepresentation
- Receive inquiries from the FBI, IRS, SEC, or local prosecutors
- Are served with a search warrant or seizure notice
Don’t assume you can “clear things up.” Talking to investigators without counsel can make things worse, even if you’re innocent.
Not Every Failure Is Fraud, But Every Allegation Must Be Taken Seriously
Business is unpredictable. Not every venture turns a profit. That doesn’t make you a criminal. If you’ve been accused of fraud in connection with a failed investment, you need to act fast. A single charge can threaten your freedom, finances, and professional future.
Simmons & Wagner can help. As former Orange County District Attorneys, we’ve seen how these cases play out—and we know how to stop them before they escalate.
Schedule a confidential consultation today and let us start building your defense.