Puerto Rico’s ongoing economic struggles may expose fraud


Puerto Rico’s economy continues to struggle. A recent report showed that the island’s Gross National Product contracted by 3.2% in 2020. By comparison to 2019, the island’s GNP shrunk by about 5%.

When breaking down the report, it appeared that people on the island spent less on personal goods and services, which naturally hurt the retail sector. Likewise, the construction industry on the island slowed down significantly, with that sector of the GNP dropping over 37%.

Largely because of government aid, the incomes of people living in Puerto Rico grew somewhat. Similarly, unemployment on the island hovered around 8.5% in 2020. By way of reference, the current unemployment rate on the mainland is around 5%.

Securities fraud schemes and other malfeasance often come to light in downturns

Those who invest in Puerto Rico’s economy or rely on financial professionals in Puerto Rico may want to pay careful attention to their business affairs as the island continues to work through tough economic times.

The reason is that fraudulent or other unlawful investment schemes often unravel under the pressure of a poor economy.

In these circumstances, investors can suddenly discover that they thought a secure investment has little or even no value.

In other situations, a bad economy brings a broker’s or other financial professional’s honest but careless mistakes into stark contrast.

Whether careless or otherwise, these missteps can result in hundreds of thousands or even millions of dollars of losses to unsuspecting investors.