At Snell Legal, we routinely handle complex, high-stakes business litigation where millions of dollars may be on the line. Often, by the time clients come to us, significant damage has already been done—and in many cases, much of it might have been avoided with earlier legal guidance.
One of the more troubling types of cases we see involves failed business investments. Clients thought they were investing in a legitimate venture or with a trustworthy partner, only to discover—too late—that what they were promised was a far cry from reality.
These cases frequently involve individuals who are either dishonest, incompetent, or both. And while damages are sometimes recoverable, we’ve seen too many situations where the money is simply gone. The investor is then left with difficult choices: walk away, seek criminal charges, or pursue civil litigation in the hope of recovering losses and warning others.
From our perspective, anyone who solicits money on false pretenses—or who squanders an investment through recklessness—is, in the end, a thief. These individuals often share common tactics. Here are five warning signs investors should take seriously:
1. An Overly Impressive Background
If someone you’ve just met claims extraordinary personal accomplishments—but offers no independent verification—be skeptical. They may be as exceptional as they claim, or they may not. Either way, don’t rely on charisma or self-promotion. Trust, but verify.
2. Claims of Unbelievable Business Success
Tales of huge profits or prior business wins can be enticing—but without corroboration, they should raise red flags. Before you invest, insist on reviewing real data: tax returns, financials, ownership records. Don’t take their word for it—do your homework.
3. Excessive Friendliness
It’s natural to form new relationships in business. But if a would-be partner is unusually friendly or flattering—especially if they seem to lack longstanding local connections—pause and consider whether you’re being groomed. Charm can be a tool of manipulation, particularly when used to distract from asking the right questions.
4. Missing or Incomplete Investment Details
When basic documentation is delayed, avoided, or simply missing, be wary. One common example: investors hand over funds without ever seeing income tax returns for an existingbusiness. Depending on the nature of the business, licenses, leases, vendor agreements, and regulatory approvals, among other things, may be critical. If this information isn’t readily provided when requested, consider it a major red flag. Anyone offering a legitimate business opportunity should have no problem with providing essential details.
5. No Proper Investment Agreements
If you're entering into an ownership arrangement and there’s no legal documentation—or worse, someone suggests using AI or a generic form to "throw something together"—take a step back. The absence of formal, customized agreements often signals a lack of seriousness, competence, or both. If the investment matters to you, it deserves proper and, as applicable, enforceable, structure.
At this point, you might be thinking: “This all seems like common sense.” And it is. But we’ve seen time and again that when people become excited about an opportunity—or the person presenting it—they set aside their usual caution. Later, they’re left asking themselves: What was I thinking?
Thieves often present as confident, articulate, and persuasive. Many are repeat offenders who have deceived others before—and will again. Disturbingly, some knowingly misuse investor funds while assuming they can avoid the consequences. Often, there aren’t many consequences—unless a victim, or law enforcement, steps up to hold them accountable.
At Snell Legal, we help clients do just that. We’ve pursued many cases against investment scammers, and won, even where others failed. And we’ve seen firsthand how a little due diligence up front can save a great deal of pain later.
If you’re considering an investment, take the time to vet the people, the opportunity, and the documents. In future posts, we’ll explore steps you can take to investigate a potential investment, what to do if you’ve already been deceived, and how we help clients pursue justice—even against experienced fraudsters.
Don’t let excitement cloud your judgment. Stay sharp, ask hard questions—and when in doubt, get legal and other appropriate advice early.