Financial Fraud Guide For Seniors

Eleanor Blayney of the CFP “It’s essential that elders be protected against financial abuse and be provided the tools to defend themselves against scammers… it’s time to shine a bright light on the shady operators who abuse our senior citizens.”

Seniors staying protected from financial fraud is something we talk a lot about here at Investor’s Watchdog, and a new guide from the CFP Board entitled Financial Self-Defense for Seniors is one of the best resources available for doing just that.  We have taken the red flags from this guide and are discussing each one at length here.  If you have an elderly parent, make sure they know about each and every one of them, so that they can stay protected from fraud.


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What does a scam artist look like?

The only way you can learn to spot a scam artist is to become educated about financial fraud.

A scam artist is not easy to spot.  Here is another video installment from Page Perry, LLC on how to spot a scam artist.


LA Times Writer Exposes Dark Side of Investment Advice Industry

Personal financial advice is often not in the customer’s best interest. Much of it is suspect and overstated.

Los Angeles Times writer Helaine Olen has written a book entitled “Pound Foolish: Exposing the Dark Side of the Personal Finance Industry.”  Having written on the subject for nearly 20 years, Ms. Olen tells in her book how the financial advice industry feeds off of popular trends and caters to customers’ worst instincts, as Vanguard Funds founder John C. Bogle once said (“New book slams financial advice industry,” InvestmentNews). (more…)


“Investments Sold Through Free Lunch Seminar Turned Out to be a Ponzi Scheme”

“The men allegedly conducted estate planning seminars, aimed primarily at retirees …, and sold promissory notes for investments in Turkish bonds to “individuals with substantial savings….”

“As through this world you wander you’ll see lots of funny men, some will rob you with a six gun and some with a fountain pen” (Woody Guthrie, Pretty Boy Floyd, 1939).

“Free lunch” seminars are a favorite tactic used by today’s fountain pen robbers who target mostly elderly retirees with substantial assets.  They know that audience members are unlikely to be vigilant investors looking for fraud or they would not be there in the first place.  Unfortunately, many audience members come there looking for someone to trust.  That is often their first and fatal mistake.  One recent example of this can be found in an article entitled “Men Charged in $28 Million Investment Scheme.” (more…)

Well Done, SEC

Did you know that the SEC generates far more than its annual budget?

One of the frustrating things about working in SEC Enforcement is that you often learn about huge investment scams only years down the road.  As long as the victims are satisfied — getting their promised checks and/or phony account statements on time — no one alerts the SEC to a potential problem.  So, it is very gratifying to find and stop a fraud before it has had a chance to collect its first million dollars.  The SEC has done so out in the Bay Area. According to the SEC’s release: (more…)

From the Bottomless Bag of Tricks

Notice three proven tactics that these defendants used.

Those who make their living by swindling investors aren’t “smash and grab” types. Generally, they devote time and resources into studying how best to separate people from their hard earned nest eggs. A recent case from the SEC’s Atlanta office offers a good example. According to the SEC’s release: (more…)

State Regulators See Explosion of Cases Against RIAs

You cannot expect regulators to be your first line of defense against a securities industry that thinks of you and your nest egg as means to an end.

Very few investors know the difference between stockbrokers and investment advisers; yet, the difference is stark and critical. By well-settled law, registered investment advisers (RIAs) owe their clients fiduciary duties, including the duty to put the client’s interests above the RIA’s interests and the duty to disclose and eliminate all conflicts of interest. Stockbrokers, on the other hand, owe those duties only in specific circumstances and are regulated by a trade organization, the far-from-aptly-named Financial Industry Regulatory Authority (FINRA), which is made up of the very brokerage firms that it is suppose to regulate. (more…)

Put Your Money On “Still Alive”

Word is that Price boarded a ferry from Key West and wasn’t on it when it docked.

The tradition of faking suicide to avoid justice after an investment scheme is long and rich. From Sam Israel’s phantom leap from the Bear Mountain Bridge to Marcus Schrenker’s attempt to crash his plane into the Gulf of Mexico after parachuting out over Alabama, investment scamsters have a way of carrying the ingenuity that made them successful scamsters into their attempts to get away with it. The latest potential entrant into that club is Aubrey Lee Price. The SEC froze his assets yesterday. Word is that Price boarded a ferry from Key West and wasn’t on it when it docked. All that was left of him was a purported suicide note. According to the SEC’s press release: (more…)

Getting Nothing for Something

This is happening all over the world right now.

Does your registered investment adviser (RIA) claim to perform some sort of continuous analysis of your account? Perhaps he or she promises that this analysis allows him or her to rebalance your account for optimum returns. If so, pay special attention to this recent case from the U.S. Securities and Exchange Commission (SEC). According to the SEC’s press release: (more…)

Another Chairman of NAPFA Charged by the SEC

Spangler isn’t the first NAPFA chairman to be accused by the SEC.

I’m a fan of the National Association of Personal Financial Advisors (NAPFA). NAPFA’s code of ethics prohibits members from accepting commissions for the sale of recommended investments. That kind of code is the only kind that holds out any hope of removing rampant corruption from the rendering of financial advice. It has never been more important, now that 10,000 baby boomers turn 65 every day and their parents live into the years in which cognitive decline makes them sitting ducks for unethical financial advisors. NAPFA does good work. Unfortunately, like every other well-meaning organization, its members are human beings. One of those all-too-human NAPFA members — as it happens, a former chairman of the organization — is now in the crosshairs of an SEC enforcement proceeding.  According to the SEC’s press release about the case: (more…)

SEC Gets a Judgment Against One of the Top Wealth Advisers in America

Vigilance in the price of enjoying the retirement for which you have worked and saved.

To set up a recent development in an SEC enforcement case, we begin with an excerpt from The Vigilant Investor: (more…)

Whistleblowers Needed in RIA Cases

When an RIA gets paid for selling certain funds there is a conflict between the RIA’s personal financial interest and the client’s interest in having the most suitable fund.

There’s what ought to be, and there’s what is. Too many investors find out the hard way that their investment advisers never introduce one to the other. A recent enforcement case from the SEC’s Atlanta office is a reminder. According to a story in the Atlanta Journal Constitution: (more…)

Ohio RIA Thief

They want to see a bigger number on the next account statement than they saw on the last one, and that is the only thing that they look for.

Registered investment advisers (RIA) owe their clients fiduciary duties. That means that the RIA must act in the client’s best interest and must disclose and eliminate, if possible, all conflicts of interest. Most RIAs point out their fiduciary duties when talking to prospective clients about the relative advantages of retaining an RIA over a stockbroker. The law is not nearly as friendly to investors when a stockbroker is handling an account. Most stockbrokers will tell you when push comes to shove — never before then — that they owe you no more duty than the nearest barista. “I was just an order taker,” they often say. “I was just following your orders.” RIAs cannot get away with that. (more…)

The Soft-Spoken Snake

Most investment fraudsters will look exactly like your current trusted adviser.

“He was the kind of guy that, if you looked at him, you never would have thought he was a bank robber.” — The Vigilant Investor, p. 40.

Right now, conjure up an image of an investment fraudster. How is he dressed? What does he drive? How’s his handshake, his smile, his personality?  You may have conjured up an image of a car salesman with a better suit and charisma to spare, someone who dominates any encounter by the force of his presence. That’s what we tend to look for, a surfeit of charisma. Of course, we believe that we are immune to it, but we aren’t. Still it is some comfort to know what a scamster will look and act like, isn’t it? But do we know? A recent case out of Florida provides the answer. According to the Sun Sentinel: (more…)


You leave their office convinced that they’d sacrifice one of their kidneys before they’d allow anything bad to happen to your nest egg.

“Charisma is no predictor of character.” — The Vigilant Investor, p. 233.

You have to understand: the securities industry weeds out very quickly people who have no charisma. All of those who remain are very good at engendering trust. You leave their office convinced that they’d sacrifice one of their kidneys before they’d allow anything bad to happen to your nest egg. There may be no bigger divergence between perception and reality. While the story that follows is unusual, it shows what happens when a broker’s self interest is carried to the extreme. According to InvestmentNews: (more…)

Japanese Adviser a Far East Madoff?

Never believe that your adviser’s ability to find legitimate investments makes him or her competent to spot a cleverly disguised fraud.

Media outlets all over the world are abuzz with news that a Japanese investment adviser may be the Far East version of Bernie Madoff. Preying on its pension fund clients, AIJ Investment Advisor’s Co. allegedly ran a $2.3 billion Ponzi scheme showing phony returns of between five and 10 percent annually. According to the Wall Street Journal: (more…)

Is Your Nest Egg an Adviser’s Piggy Bank?

You have just bagged yourself a live con man or woman.

Registered investment advisers owe their clients a fiduciary duty. They are required by law to put their clients’ interests before their own and to disclose and eliminate, if possible, all conflicts of interest. It is a high standard, and it ought to be. Not everyone lives up to it. The SEC and federal prosecutors in California have found one such adviser. According to the SEC’s press release: (more…)

A Course at College, But Not a College Course

Get advice from someone who has no financial interest in managing your money before you venture into the world where everyone wants a piece.

One of my partners recently received a very interesting brochure in the mail. It was an invitation to enroll in an “Educational Course for Adults — Ages 50 to 70.” The brochure states that the course is being conducted at Oglethorpe University, a well respected institution of higher learning here in Atlanta. In parenthesis (and smaller font), they disclose that the course is not affiliated with the university. It seems that the course presenters are only renting out a classroom. The brochure is eight pages long and includes a Course Outline and a Course Preview. They plan to cover “Retirement Needs and Expenses,” “Retirement Roadblocks and Mistakes,” and many other areas of interest to retirees and those approaching retirement. The instructors represent that they have earned the Certified Financial Planners designation. They are affiliated with LPL Financial, which is the largest independent broker-dealer in the U.S..  (more…)

IW Goes to the Carnival

There are folks who work hard to gather blog posts relevant to certain types of readers.

Although I have been blogging for more than three years now, I still feel like a rookie when I find out that there are important players in the blog world of which I have been completely ignorant. Recently, I learned that there are folks who work hard to gather blog posts relevant to certain types of readers, and assemble them on a site called a Blog Carnival. I was thrilled to get this lesson after being included on two blog carnivals in ten days. (more…)

The Investment Adviser and the Fish Story

Why should an investor care about an RIA’s AUM?

Size it up for yourself: all other things being equal, are you more likely to entrust your life savings to an adviser who manages $3 million or an adviser who manages $200 million? The bigger figure seems to speak of success, right? If an adviser is managing that much money (the total is called “assets under management” or “AUM” in industry slang), clients must be happy. They must be sticking around year after year. Registered investment advisers (RIAs) know that investors draw those conclusions, which is why they talk about their AUM the way recreational fisherman talk about their catch. And, the number of times that RIAs exaggerate their AUM might rival the number of times that fisherman add a pound or two to the weight of that large mouth bass they’ll brag about to friends. The SEC believes that it has caught an RIA telling a whopper of a fish story. According to  InvestmentNews: (more…)

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