Washington D.C. Unlawful Fundraising Practices

Under D.C. Code § 26–1311.02, any person or entity engaging in deposit-taking or investment solicitation without appropriate regulatory approval may face criminal and civil liabilities. These practices fall into several typical categories:

• Promising full principal return or more with fixed interest
• Guaranteeing profit without underlying assets
• Committing to buy back investments at inflated values
• Covering future losses with cash or assets from third parties

If a group collects money under the guise of “asset management,” “credit services,” or “investment partnerships,” but lacks proper registration, it may be charged with unauthorized banking or fraudulent business practices.

Unlawful fundraisers in D.C. often use deceptive strategies, such as:

• Offering monthly returns far above market averages (e.g., 5–10%)
• Emphasizing “100% capital guarantee” to reduce perceived risk
• Making early payouts to boost investor trust (Ponzi-style)
• Recruiting participants via social media or closed networks
• Posing as government-authorized or licensed entities

In some cases, these schemes exploit modern trends—AI, blockchain, overseas investment—to project legitimacy. Victims are often drawn in through acquaintances, online communities, or marketing that appears professional and well-structured.

The following outlines common penalties under Washington D.C. law:

• Unauthorized solicitation of funds: Up to 5 years imprisonment or $50,000 fine
• Fraudulent advertising of financial services: Up to 2 years imprisonment or $20,000 fine
• Use of misleading or restricted financial business names: Civil penalty up to $50,000
• Vicarious liability of organizations: Corporate penalties applied when committed by representatives

Certain business names are strictly prohibited unless officially licensed. Examples include:

• “Finance” or “Financial Services”
• “Capital” or “Credit”
• “Investment” or “Asset Management”
• “Guarantee,” “Fund,” or “Securities”

Use of these terms in unauthorized operations is considered misleading and may trigger regulatory action.

Courts consider the scale, intent, and structure of the operation in determining the sentence. Below is a general breakdown of penalty tiers:

Sentencing Guidelines for Washington D.C. Unlawful Fundraising Practices

Note: The following table summarizes commonly observed sentencing trends in unlawful fundraising cases in Washington D.C. It is not based on fixed statutory guidelines but reflects general court practice.

Victims are strongly advised to take the following actions:

• Gather evidence: Collect contracts, transaction records, communications promising fixed returns, and any related materials
• File a criminal report: Submit reports to the D.C. Metropolitan Police or federal agencies for fraud or financial crimes
• Report to regulators: Contact the D.C. DISB to initiate investigations
• Seek legal assistance: Work with attorneys to pursue damages through civil litigation such as fraud, unjust enrichment, or breach of trust

Individuals accused of such offenses should take swift action to mitigate outcomes:

• Hire legal counsel: Legal professionals can help demonstrate lack of intent or limited involvement
• Argue mitigating factors: For example, ignorance of licensing requirements, or lack of personal benefit
• Make restitution: Showing efforts to compensate victims voluntarily may reduce sentencing
• Disclose involvement details: Cooperation with investigators may provide sentencing relief

Even if liability is established, courts often weigh intent, cooperation, and harm mitigation in final sentencing.