Investor's Watchdog.com: Stock, finance and investment protection for investors

It seems as if each week brings news of celebrities who fell victim to Bernard Madoff’s scam.  Kevin Bacon, writer Alexandra Penney.  It will be someone else next week.  When I worked in the Enforcement Division of the Securities and Exchange Commission, I worked on cases in which A-list actors, Pro Bowl football players, and even astronauts were victims. 

When famous people lose money to a scam, why is more newsworthy?  It isn’t that they lost more or that the loss did more damage.  It’s probably just because they are famous - so much so that even a trip to the grocery store might yield a week’s worth of pictures for the gossip rags.  But, I am afraid that the coverage implies something false and dangerous - that celebrities should have been smarter or more skeptical or better protected. 

Despite their high profile lives, in the ways that matter to scam artists and bad brokers they are just like you and me; just as susceptible to the negligence, recklessness, or intentional misconduct of those they trust.  They are targets.  They have money to invest - often lots of it.  They have family and work obligations that prevent them from spending a lot of time paying close attention to their investments.  More importantly, they lack experience in investigating brokers and unregistered investments. 

Perhaps most at risk are athletes - kids really - who come out of college (oftentimes without a degree) with a window of between 1 and 5 years to make money by doing what they do best, after which they will have to think of another way to support themselves and their families.  They’ve never had that kind of money before.  Like most kids, they are prone to listen to their friends (most of whom don’t have any more life experience than they do) and to believe that money will always be as plentiful as it is right now.  They are low-hanging fruit for aggressive brokers and scam artists. 

You might think that the agents of celebrities and athletes would be an additional layer of protection.  But oftentimes the agents wind up being either the problem or an additional victim.  They make recommendations to their clients without doing a professional investigation.  They go with the guy who has been “earning good returns” for many years (anyone else thinking of Bernie Madoff now?)  And their clients end up in the newspaper; not for touchdowns, Pulitzers, or Oscars, but for what makes them like you and me, their vulnerability to brokers and scamsters.  

It need never happen again.  A professional investigation gives both those who are famous in the traditional sense, and those who are famous only to their family and friends, protection against losing what they’ve worked so hard to save.