LAS VEGAS (KTNV) — Nevada lawmakers are looking at ways to help scam victims across the state.

On Thursday, Secretary of State Francisco Aguilar introduced Senate Bill 76 to the Senate Committee on Judiciary.

If passed by state lawmakers, the bill would create a fund to compensate victims of securities fraud.

You can read the bill below.

According to the FBI, securities fraud includes a wide variety of issues like high yield investment fraud, Ponzi schemes, pyramid schemes, advanced fee schemes, foreign currency fraud, broker embezzlement, hedge fund-related fraud, and late day trading.

Here in Nevada, the Nevada Securities Act and the Nevada Commodities Act are both found in state law and are administered by the Secretary of State’s Office, through the Securities Division.

“One of the responsibilities of the Secretary of State is to ensure that we protect the securities and investment environment in Nevada,” Aguilar told me. “That’s an issue that impacts some of our most vulnerable communities, especially our senior communities. You have individuals who have worked a lifetime building up a nest egg to be able to live in retirement comfortably. They meet scrupulous individuals, bad actors, who built their trust and then start to slowly defraud them in the investment area.”

So what does a typical securities fraud scam look like?

“An individual with a very low net worth or low salary is enticed to invest in a new, local startup with a promise of a high rate of interest as a return. Unfortunately, the offer itself was premised on fake statements or misleading information or missing information,” Deputy Secretary of Securities Erin Houston explained. “And when the investment fails, the individual is completely out of luck in terms of recouping their money.

She added that if the bad actor is charged, the money is usually gone and victims have no way of getting restitution, even if the court orders it.

For example, in Fiscal Year 2023, the division investigated securities fraud from investors totaling over $16 million but investors only received $205,000 in restitution. In Fiscal Year 2024, the division looked into fraud claims of nearly $10 million and investors received just over $1 million in restitution.

Senate Bill 76 would fill that gap to provide restitution to more victims.

How much money could scam victims receive?

Scam victims could receive up to $25,000. This would apply to victims who have been awarded restitution as set forth in NRS 9640.

Aguilar said some people would end up losing more money than that in securities fraud schemes but this would at least help them get back on their feet.

“The main reason we are proposing this legislation is that it provides a way for Nevada residents to obtain desperately needed relief after losing what is often a significant chunk of their savings to someone who has defrauded them,” Aguilar said.

Where would the money for the fund come from?

If passed, a fractional amount of revenue that presently goes to the state general fund would be held for victims of securities fraud.

For now, Aguilar said they would cap the total fund amount at $500,000.

“We understand that revenue is important to the state and we want to support the state and want to make sure we are not diverting too much funding away from the state at large.”

Aguilar also told me they’re also looking at opportunities to take third-party funds to add to the fund.

“Sometimes, when there is mass litigation, they look for places to deposit the proceeds of those funds,” Aguilar explained. “Also, if there’s an individual who’s generous like a JP Morgan Chase, that understand what we’re trying to accomplish, they’d make a contribution to the fund.”

What should securities fraud victims do if they’ve been scammed?

According to Aguilar, it has been challenging getting victims the help they need.

“We find that it’s hard for people to come forward when they’ve been victims of investment fraud. This will hopefully encourage people to bring their case to us because the more information we have, the more evidence we have, the faster we can take these bad actors out of the market,” Aguilar said. “Please call us. Please file a complaint so that we can send our investigators out and hold bad actors accountable.”

Those thoughts were echoed by several AARP officials, who testified in support of the bill.

“Some of them feel like they just get a shrug. Well, there’s nothing we can do. This would address that,” said Jessica Padron, Advocacy Director for AARP Nevada. “Our call to action is that the creation of this fund is not just good policy, it’s the right thing to do and fraud victims should not be left to suffer the consequences of crimes committed against them.”

What was the feedback from lawmakers?

“To be honest with you, I was quite impressed at how empathetic they were to individuals who are victims of investment fraud,” Aguilar told me. “They understood the need for this but also to their willingness to discuss how we fund it.”

The bill is now on its way to the budget committee for further consideration.

What red flags should people look out for and how can they file reports with the Secretary of State’s Office?

• If the deal seems too good to be true, it probably is.
• Call the Secretary of State’s Office to verify that individuals are licensed broker dealer or licensed investment advisors.

You can file a complaint with the Secretary of State’s Office here.

The Secretary of State’s Office also provides a free Nevada Investor Guide, which you can read below.