Legal Magazine

Fraud Alert: Government Bonds in Brazil

Posted on the 24 May 2013 by Angelicolaw @AngelicoLaw

In Brazil, fraud is unfortunately an everyday issue. Initialing pages to contracts, notarizing signatures and obtaining witness signatures are just some of the methods used to combat fraud in business transactions. Yet one method of deceit frequently used by con artists in Brazil involves the sale of fraudulent government bonds.

Government bonds in Brazil

Títulos da Dívida Pública,” which are government bonds, are issued by the Treasury Department to those who have paid an amount of money in advance to help the federal government obtain the funds necessary to advance the country´s development. According to law nº 10.179/2001, there are three accepted types of government bonds: (i) National Treasury Letters (“Letras do Tesouro Nacional”); (ii) Treasury Finance Letters (“Letras Financeiras do Tesouro”); and National Treasury Notes (“Notas do Tesouro Nacional”).

For the criminal mind, this means an opportunity to receive money up front in return for nothing more than a piece of paper. Surely, the result will be fraud.

How to avoid becoming a victim

Avoid becoming a victim by familiarizing yourself with the law and retaining counsel to help you review potential transactions of this sort. When purchasing a government bond, it is important to pay attention to every detail of the document, reviewing its quality and analyzing its authenticity. Criminals are creative in the way they attempt to deceive their unwary victims. For example, one common trick is to try to sell a type of bond that the government stopped issuing since 1969. Most of the time, these fraudulent bonds are presented as a piece of paper. Yet, nowadays, government bonds are mostly sold online.

This type of fraud happens in such high frequency that the Treasury Department wrote a note on its website explaining the situation and advising as to how to avoid becoming a victim of such crimes.

For the victim, the biggest problem may not be the amount of money lost in buying the fraudulent bonds, but rather in the unknowing use or resale of them. The victim may in fact suffer terrible consequences, such as being obligated to pay an expensive fine, being accused of a dishonest action or, worse yet, being charged with committing a crime against the federal government.

So it is important to pay attention to these frauds because, as we have seen here, they may bring harmful consequences. In the event you believe you have been a victim of fraud, do not hesitate to contact a legal consultant to help you.

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