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FDIC Issues Alert on Bank Recapitalization Scam

Posted on 7/24/2012

The FDIC yesterday issued a special alert on individuals or purported investment advisers who have attempted to defraud financially weak institutions by claiming to have access to recapitalization funds.

"These parties also may claim that the investors include prominent public figures and [they] have been approved by one or more of the federal banking agencies to invest substantial capital in the targeted institutions," the FDIC said.

The bogus investors require the targeted institutions to pay retention fees, due diligence fees and other costs in advance, the agency said. But once they are paid, they don't conduct substantive due diligence or pursue the proposed investment.

"Institutions should be extremely cautious if approached by any party in a similar manner," the agency said. "Before entering into any agreements or paying any funds, targeted institutions should verify the credibility of such solicitations, including the credibility of the investor group, their principals, and their representatives.

To read the alert visit:

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