Legal Question in Business Law in Pennsylvania

A few months ago I asked this question...

"I sell stock investment education and coaching to clients. An average client pays me around $1000 for coaching. To sell/convince the clients I show them my past investment history of my online broker accounts. The investment history is accurate within the broker account, but the client assumes real money was used, which is not true. Virtual funds were used for these investments. If I do not disclose or tell clients that the investment history was achieved using a DEMO account with virtual funds, can I get in trouble for this? Is this any form of wire fraud or false pretenses or anything like that?"

and a lawyer gave this response

"If you show a potential client your portfolio, but fail to disclose that you were not using your money, or "real" money, you are guilty of making fraudulent misrepresentations to a potential client because you are misleading the potential client into believing that you risked your money in making these investments.

Best of luck, "

Now, I understand this is a free site. I don't feel the lawyer put much thought into my answer. My question is if I never say I've made any money to these potential clients "how can this be a fraudulent misrepresentation if I never made a false statement?"

Asked on 1/22/15, 11:45 am

1 Answer from Attorneys

ANDREA G. TILLIS Law Offices of Andrea G. Tillis

It would be a big mistake if a customer equated the length of an answer to the quality of its content. My Answer to the customer's question was correct, complete, precise, and to the point, not loaded with excess verbiage which would have added nothing to my Answer. However, this is a common remark when one does not receive the Answer they were hoping for, nor support the result they hoped to achieve.

It would be difficult to condense a discussion of all the nuances contained in the customer's business plan he hoped to market, and in which his actions could result.. I would be remiss, if I did not bring the negative implications of his proposed business plan to his attention, or that the sale of his business plan could be construed as the direct result of "fraud in the omission" and "fraud in the inducement, and that is exactly what the customer would be engaged in - Failing to disclose to potential customers that he never risked" real money" , or any of his own money to test the validity of the business pan he was marketing, or in the experiments he conducted and on which he expected potential "customers" to rely in paying over $1,000 or more to an individual who was willing to take their money, but unwilling to risk his own to test the validity of the business plan he .was selling.

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Answered on 1/29/15, 3:07 pm

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