Promissory Note Fraud

A promissory note is a written promise to repay a debt.  The promissory note includes the terms of the obligation, such as the amount of the loan, the interest rate, if any, the method of repayment, the repayment schedule and any other pertinent details. 

Common Uses of Promissory Notes

Frequently, promissory notes are used in connection with the following types of transactions:

  • real estate transactions
  • banking transactions
  • mortgages and loans
  • loans made by and between relatives
  • capital-raising endeavors by businesses

What is Promissory Note Fraud?

Occasionally, promissory note schemes arise which involve fraud.  Promissory note fraud includes loan scams and securities fraud.  Recently, promissory notes schemes involved the sale of fraudulent notes under the guise of “securities.”  Securities salespersons were offered very high commissions for the sales of these notes and were told that investors would receive guaranteed high returns.  The salespersons failed to investigate the details of the securities and then sold the notes to investors.  However, the notes were fraudulent and part of an investment scam and the investors lost millions of dollars.  The matters were prosecuted by the Securities and Exchange Commission as securities fraud.  Those prosecuted face up to thirty years in prison for each offense and thousands of dollars in fines.

Getting Legal Help

If one has been the victim of a promissory note scheme or fraud, one should contact an experienced attorney as soon as possible.  An experienced attorney can not only evaluate one’s particular matter, but also the attorney can determine what options one may have and direct one to the most appropriate course of action.