ment 7 - Find the criminal, find the crime Bolton Financial Group is offering an interesting investment opportunity. For only $5,000, an investor can participate in a hedge fund that will return at least 15% return per year for a one-time financial management fee of $500. a. Is this a good deal? b. In three years (using the rule of compounding), how much would this investment be worth? After 6 years of accumulation in the fund, your investment account is locked, and Bolton Financial Group suddenly shuts down. In a letter to investors, management announces that a never-seen-before market correction happened to the bankruptcy of GigaCorp., a stock holding in the hedge fund that represented a temporary position of 70% of the fund. a. At the end of 6 years, how much was an investor's initial $5,000 investment worth? b. Is this fraud? Can the investors sue Bolton Financial Group for misleading them? Explain your answer. Graham Smith, VP Operations, at Bolton Financial Group, was very concerned about the Investment Management Department's decision to temporarily take such a large position in GigaCorp and took out $25,000 from the hedge fund to re-invest it elsewhere without notifying anyone. a. Was this theft? Why or why not? Argue your position by stating your assumptions and your reasoning. Use what we learned in class b. After three days, Smith made a 500% return on his re-investment. He returned the $25,000 to the hedge fund. Was a crime committed? If yes, which one and explain. If no, explain C. Smith converted his earnings to bitcoin and then invested the bitcoin in a few other hot cryptocurrencies. After a few days and a healthy return, he purchased a few NFTs. After a few months of holding these electronic property items, he sold them as well for a decent profit and bought an average car, and a small condominium. Did he launder his profit from the re-investment of the $25,000 he took from Bolton Financial Group? Why or why not? Concerned that auditors are asking too many questions around the office, Smith searches the client database for investors in the hedge fund and finds an Emily Stone, age 87. Her account balance is $25,000. He contacts her and explains that he is a VP at Bolton Financial Group and that he is offering her $10,000 to say that she gave him permission to borrow her money for a quick investment opportunity. She suspects something wrong and refuses. He then threatens to block her account for two months is she refuses. This would put her in default of rent payment at her retirement home and she would be kicked out of the home, onto the street. Reluctantly, she accepts a. Did Smith commit a crime? If yes, which crime did he commit and if proven guilty what would be the penalty? If no, is Mrs. Stone part of a crime as well? b. If Mrs. Stone simply accepted the deal, has a crime been committed? (This one might involve extra research on the internet.) ment 7 - Find the criminal, find the crime Bolton Financial Group is offering an interesting investment opportunity. For only $5,000, an investor can participate in a hedge fund that will return at least 15% return per year for a one-time financial management fee of $500. a. Is this a good deal? b. In three years (using the rule of compounding), how much would this investment be worth? After 6 years of accumulation in the fund, your investment account is locked, and Bolton Financial Group suddenly shuts down. In a letter to investors, management announces that a never-seen-before market correction happened to the bankruptcy of GigaCorp., a stock holding in the hedge fund that represented a temporary position of 70% of the fund. a. At the end of 6 years, how much was an investor's initial $5,000 investment worth? b. Is this fraud? Can the investors sue Bolton Financial Group for misleading them? Explain your answer. Graham Smith, VP Operations, at Bolton Financial Group, was very concerned about the Investment Management Department's decision to temporarily take such a large position in GigaCorp and took out $25,000 from the hedge fund to re-invest it elsewhere without notifying anyone. a. Was this theft? Why or why not? Argue your position by stating your assumptions and your reasoning. Use what we learned in class b. After three days, Smith made a 500% return on his re-investment. He returned the $25,000 to the hedge fund. Was a crime committed? If yes, which one and explain. If no, explain C. Smith converted his earnings to bitcoin and then invested the bitcoin in a few other hot cryptocurrencies. After a few days and a healthy return, he purchased a few NFTs. After a few months of holding these electronic property items, he sold them as well for a decent profit and bought an average car, and a small condominium. Did he launder his profit from the re-investment of the $25,000 he took from Bolton Financial Group? Why or why not? Concerned that auditors are asking too many questions around the office, Smith searches the client database for investors in the hedge fund and finds an Emily Stone, age 87. Her account balance is $25,000. He contacts her and explains that he is a VP at Bolton Financial Group and that he is offering her $10,000 to say that she gave him permission to borrow her money for a quick investment opportunity. She suspects something wrong and refuses. He then threatens to block her account for two months is she refuses. This would put her in default of rent payment at her retirement home and she would be kicked out of the home, onto the street. Reluctantly, she accepts a. Did Smith commit a crime? If yes, which crime did he commit and if proven guilty what would be the penalty? If no, is Mrs. Stone part of a crime as well? b. If Mrs. Stone simply accepted the deal, has a crime been committed? (This one might involve extra research on the internet.)
