There are many high-risk investments, including promissory notes, that our clients have been persuaded to invest in. Promissory notes are often unregistered and commonly used in cases of fraud. Our firm is dedicated to helping exploited clients recover their losses.
Promissory notes as investments can be very problematic. Everybody has experience with promissory notes, they just don't realize it. When you bought your house, it actually comes with two documents. There's a promissory note and a mortgage. The mortgage is the thing that says the bank has rights to your house if you don't pay, and the promissory note is the thing that says you'll pay them. It says they've loaned you this much money, this is the interest rate, these are the payment terms, this is when you pay it back.
So there's nothing wrong, of course, with promissory notes in and of themselves, but what happens is that people seeking to make some money off the unwary or the unsophisticated have packaged these things into investments. And basically they're selling you on this idea that, look, these are all these great debts, these promissory notes, that other people owe. They're making payments. You get to put your money in, and you'll get a nice return back out.
The problem is a lot of times they're either entirely fraudulent or not well capitalized or just otherwise not what they were promised to be. And there are so many other investments that are regulated, that do have some guarantees behind them, and certainly tell the investor that somebody has looked into this and that the money is actually there and the commitments are coming in and all those type of things that will pay you a return that I'm always very cautious for my clients if they talk about wanting to invest in a promissory note, as those can be a very easy trap for the unwary.