Don’t Be a Next Victim of Financial Fraud

Ron Surz   949/488-8339  Originator of Age Sage

  • New financial frauds are unprotected any day, frequently by repeat tricksters.
  • Fraudsters typically chase on a greed. Examples uncover how.
  • We can strengthen ourselves by following some candid practices.

You’d consider that a prominence of a Madoff Ponzi scheme would have sensitized investors to fraudsters, though investors get scammed all a time, and frequently by repeat offenders. According to The Market for Financial Adviser Misconduct, a investigate investigate by Professors Mark Egan of Harvard, Gregor Matvos of a University of Texas and Amit Seru of Stanford :

Seven percent of advisers have bungle records, and this share reaches some-more than 15% during some of a largest advisory firms. Roughly one third of advisers with bungle are repeat offenders. Prior offenders are 5 times as expected to rivet in new bungle as a normal financial adviser. Firms fortify misconduct: approximately half of financial advisers remove their jobs after misconduct. The labor marketplace partially undoes firm-level fortify by rehiring such advisers. Firms that sinecure these advisers also have aloft rates of before bungle themselves, suggesting “matching on misconduct.” These firms are reduction fascinating and offer reduce compensation. We disagree that heterogeneity in consumer sophistication could explain a superiority and industry of bungle during such firms. Misconduct is strong during firms with sell business and in counties with low education, aged populations, and high incomes. Our commentary are unchanging with some firms “specializing” in bungle and catering to unassuming consumers, while others use their purify repute to attract worldly consumers.

In other words, a bad guys keep preying on a unassuming rich (who says income creates we smart?), and associate with firms that encourage misconduct. You’d suspect that these offenders get improved with practice, so we should not blink their cleverness. We are all vulnerable.

In a following we share some examples of rascal to ensure against: allege price fraud, unchanging fraud, and Ponzi schemes. We yield a new occurrence of each, and interpretation with recommendations to strengthen ourselves.  Don’t let rascal occur to you. 

Advance Fee Fraud

In Directly from a SEC: Fraud Warning, profession John Lohr describes:

Advance price rascal gets a name from a fact that an financier is asked to compensate a price adult front – in allege of receiving any proceeds, money, stock, or warrants – in sequence for a understanding to go through.  The fraudulent price might be described as a deposit, underwriting fee, estimate fee, executive fee, commission, regulatory price or tax, or even an immaterial responsibility that fraudsters might pledge to repay later.  Sometimes, allege price frauds brazenly aim investors who have already mislaid income in investment schemes.  Fraudsters also mostly proceed investors to handle allege fees to escrow agents or lawyers to give investors comfort and to lend an atmosphere of legitimacy to their schemes.

Mr. Lohr provides a following example.

·         Perpetrator:  Brett A. Cooper, and his companies

·         People impacted: Investors in New Jersey

·         Losses: $7 million

·         The “Pitch”:  3 opposite schemes involving primary bank exchange and abroad debt instruments requiring fees to open special accounts.

·         Warning flags: Advance price rascal schemes might try to dope investors with official-sounding websites and e-mail addresses.

·         Discovery: Department of Justice hearing of mass mailing schemes

Regular Fraud

Be heedful of schemes that effect to emanate large taxation savings. This gimmick cost a financial confidant $12 million and 7 years in jail.

·         Perpetrator: Henry Brock, boss of Utah-based Mutual Benefit International Group

·         People impacted: Wealthy people in Utah

·         Losses: $ 4 million in artificial taxation deductions

·         The “Pitch”:  Generate business waste by a auxiliary Brock owned

·         Warning flags: Too good to be true

·         Discovery: IRS audits

Ponzi Schemes (aka Pyramid Schemes)

Ponzi schemes are a many common form of fraud. The scamsters guarantee unusual returns, and broach those with new financier monies, until a upsurge of new investors ends. Methods abound. For example, there’s a recent case involving 5 financial advisors who pocketed $102 million before they were caught.

·         Perpetrators:  5 advisors opposite a nation in Rochester NY, Ocala FL, San Antonio and Orville OH

·         People impacted: More than 600 investors

·         Losses: $ 102 million

·         The “Pitch”:  Guaranteed double-digit earnings and dividends

·         Warning flags: Any “Guarantee” is a warning. Too good to be true.

·         Discovery: SEC

Protecting  Ourselves

The SEC maintains and updates a website to strengthen investors during  Its superintendence and news are really helpful.

Attorney John Lohr, mentioned above, offers a following recommendations:

  •  Does it sound too good to be true?  If it sounds too good to be true, it (probably) is.
  • Is a investment charity purebred with a SEC and my state bonds agency?  Where can we get some-more information about this investment?  Can we get a latest reports filed by a association with a SEC: a handbill or charity circular, or a latest annual news and financial statements?
  • Research a credentials of a people and firms charity and offered we these investments, including their registration/license standing and disciplinary history.
  • Do we know what we am similar to?  Make certain we entirely know any investment or business agreement that we enter into, or have a terms reviewed by a efficient attorney.
  • Can we locate a business or chairman with whom we am dealing?  Be heedful of businesses that work out of post bureau boxes or mail drops and do not have a travel address.  Also, be questionable when traffic with persons who do not have a proceed write line and who are never in when we call, though always lapse your call later.


Sociopathic fraudsters like Bernie Madoff are penetrating to gain on a complacencies and greed. As Michael Douglas says in a film Wall Street “Greed is good” … for criminal men. Like Madoff, many fraudsters are no garden accumulation bandits. Many seem to be honest and infallible over reproach. So some contend that a critical doctrine from these frauds is that no volume of due industry can strengthen us from being had. The smarter proceed is to “trust though verify” rather than solution to be duped by a subsequent Madoff.

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