I am a Fraud Victim but I also have some participation in the enterprise.  What are my rights and responsibilities?

Often a victim of fraud is embarrassed and exaggerates his or her legal responsibility.  With 20-20 hindsight it is easier to see how one was misled and how one could have prevented or learned about the deception.  Usually 20-20 hindsight does not prevent or limit your legal remedies.

A more serious problem is where you have some involvement in the scheme. This often occurs when the promoter needs to find investors and he recruits people who have clients (e.g. insurance agents) to make introductions or sales.  The usual approach is to tell the local representative that the investment is unregulated, is very safe and pays a high commission.  "Offer it to your clients.  You will be doing them a favor.  And by the way, you better buy it yourself so you can tell your clients if they ask." 

After you become convinced, invest yourself, and recruit others, you discovery that the transaction is not as represented. Unfortunately you are now liable along with the promoters to the investors as one who aided or materially participated in the fraud.

So what do you do?  There are two choices: Lead the charge or run! 

Running:  Sometime you can avoid liability because the statute of limitations (usually three years) has run.  Sometimes you can delay until that time period has expired.  However the relationships you built with the other investors will be destroyed.

Leading the Charge: Although it is risky, leading the pursuit of the real culprits often is the best choice.  You can be honest with your clients and let them know that you were duped also.  Often the final result is much better than ignoring the problem.  This strategy is more likely to be successful when you are a lower degree of victim.  See Victims by Degree below.