Don’t “Test Drive” Investment Opportunities

The Test Drive is a way to trick you into giving money to an investment fraud, even though you may be reluctant to do so.

Today we are bringing you another post from our Investor’s Watchdog University video series, brought to you by Page Perry, LLC.



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CCOs Held Accountable For Regulatory Misconducts

Just like with the CEO and CFO, if the CCO is found to have been negligent, they should be held accountable for their mistakes.

The Journal for Practical Compliance and Risk Management for the Securities Industry (PCRMSI) recently printed an article entitled “The Girl with the SEC/FINRA Tattoo: Disciplinary Actions Taken Against Chief Compliance Officers (November 2010-June 2011)” in which they detailed recent regulatory actions taken against Chief Compliance Officers (CCO) of various firms.


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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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Be Vigilant About Potential Boston Marathon Charity Frauds

Don’t let fraudulent charities deter you from helping those in our country who are in need.

Charity Fraud involves using fraudulent measures to get money from people who believe they are making donations to charities.  Last week we talked about an instance of Charitable Gift Annuity Fraud (CGA), but in light of the recent tragic events in Boston, we will discuss it again, because now is a time when fraudulent charities may be popping up.


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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.



Diamond Hoax of 1872

Arnold and Slack received about $600,000-small change in comparison to the supposed value of the diamond mine

In 1872 a group of investors, including Charles Tiffany of Tiffany and Co., were swindled by cousins Philip Arnold and John Slack into believing a Californian mine held millions in diamonds.  According to History.com,


Should FINRA Tolerate Known “Bad Apples?”

Should this type of elaborately planned financial dishonesty be tolerated by FINRA?

The Financial Industry Regulatory Authority apparently tolerates certain instances of clear and unequivocal dishonesty by brokers.  While the harm to investors that flows from that dishonesty may vary from Madoff magnitude to nothing, dishonesty – when it is irrefutable – should not be tolerated by an industry that holds itself out as trusted professional financial advisors.  Yet it is tolerated. (more…)

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The “.44 Magnum Investment” Fraud

“[H]e named the program accordingly because “when people found out they’d been ripped off, they would buy a .44 Magnum and shoot themselves in the head.”

Another investment con and more personal tragedies that could have been prevented have occurred.  This time the SEC has charged Geoffrey H. Lunn of Sheridan, Colorado with operating a $5.77 million investment scheme with marketing assistance from Darlene A. Bishop of Odessa, Texas, and Vincent G. Curry of Las Vegas.  Lunn falsely told investors that he was vice president of a firm whose executives had connections to Dresdner Bank. The fictitious firm, Dresdner Financial, with a name similar to a Dresdner Bank, a legitimate bank, apparently gave Lunn an aura of credibility with investors. (more…)

Get In the Game

It will cause so much devastation in the months and years to come that it will make us forget Bernie Madoff.

I’ve been warning for the last several years about the tsunami of investment fraud currently sweeping around the globe. It’s already cost baby boomers, senior citizens, pension funds, college endowments, and other investors more than $100 billion and will cause so much devastation in the months and years to come that it will make us forget Bernie Madoff. Having warned you as best I can through this blog, speeches, and The Vigilant Investor, I’ve decided that the best place for me in this battle is back at the SEC, where I first caught the investor protection bug.  On Monday I begin work as a Senior Trial Counsel in the SEC’s Atlanta Office. Knowing the caliber of people in that office as I do, I have never been so excited to start a job. I pray that those of you who have followed this blog and who have put yourselves through the training to become vigilant investors, will contact me when you discover an ongoing fraud.  My new email address will be [email protected]. (more…)

The One Phone Call You Must Make

You’ll never realize that your money is at risk until it is far too late to recover it.

I have been swimming in an ocean of fraud and fraudsters for the past 22 years. It’s taught me some valuable things and unique approaches to protecting investors from frauds so clever that you’ll never realize that your money is at risk until it is far too late to recover it. The Vigilant Investor teaches those approaches. You don’t have to buy it (although it’s going on Amazon for just over $2 — The Wall Street Journal called is “a fascinating and valuable read” — and would make a great Christmas gift for your parents), but please pick it up at your local library. And please have your elderly parents read it. Hawking my book aside, though, just a day away from a big change in my career (stay tuned for tomorrow’s post), I have been thinking about what message I want to make certain comes through loud and clear; the one piece of advice I want you to remember if you remember nothing else. The following story sets it up. According to a recent SEC release: (more…)

If It Sounds Too Good To Be True, You Are Talking To An Amateur

For every one buffoon who promises ridiculous returns, there are several competent scamsters who know better than to do so.

For the last several decades — at least the last five during which I have been around — we’ve been fed well-meaning but dangerously incomplete information about how to avoid the financial ruin that comes with investing in a scam. The old axiom: “If it sounds too good to be true, it probably is,” makes its way onto every list of how to keep your nest egg safe. What makes the axiom so dangerous is that it is almost true, as far as it goes. Because, of course, if an investment sounds too good to be true, it is (not “probably  is”) too good to be true. Take a look at the story of a recent case in which the axiom would have protected people who heeded it. Then we’ll talk about why the axiom, by itself, will never be enough. According to Courthouse News Service: (more…)

A Tsunami Swamping the Globe

You are prone to the blindness that I’m talking about.

The tsunami of investment fraud that we’ve been warning about for four years is engulfing investors worldwide. This week we read about a large suspected Ponzi scheme in the Phillipines. According to Business Mirror: (more…)

How Do You Know?

It allows you to be a real hero at a time when heroes are in desperate need

There are far more of these characters than you realize; so many that you pass by several in your typical week.  Take a minute to read the story below, from a case by the Department of Justice. According a DOJ release: (more…)

Consider It A Dealbreaker

Please add this hard and fast rule to your investment toolbox.

Somewhere along the investing road, almost every investor comes across one piece of advice that is easy to remember and apply. I’m not talking about the nearly worthless axiom “If it sounds too good to be true, it probably is,” which has led more people to lose their nest eggs than all Bernie Madoff’s victims combined. I’m talking about good, solid pieces of sound advice, like, “Never write a check directly to your financial adviser.” From Connecticut comes a story that should provide another bullet in the savvy investor’s arsenal. According to ctpost.com: (more…)

Leaving the Past Behind

Unless you start there any investigation that you do likely will only set the scam artist’s hook deeper.

Earlier this week we posted about a scam in which one of the defendants used an alias to prevent vigilant investors from learning of his prior brushes with the law. We explained how changing identities is a common scam artist tactic and one that vigilant investors know how to combat. Today, from the SEC’s Miami office, comes another case of a scamster who decided to put his troubling reputation behind.  According to the SEC’s release: (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…)

The Jed Clampett of Solar Energy

There is another energy sector scam that is pushing for its place in the energy scam pantheon.

There are so many oil and gas scams out there that we could launch a sister blog that covered nothing else. The profit potential of fossil fuels is long established and every investor dreams of becoming the next Jed Clampett. But there is another energy sector scam that is pushing for its place in the energy scam pantheon: the solar energy scam. This week the SEC filed an enforcement case that highlights the rise of such scams. According to the SEC’s release: (more…)

Wisconsin Case Highlights the Limits of Perception

If you do more than set forth to confirm legitimacy, you’ll believe that you’ve done so, even as your money goes up in smoke.

“But I saw their tax returns!” At least one of the victims of the scam described below must have said this when he or she discovered that the investment was a fraud. But creating phony documents is as easy as a few mouse clicks; something any middle high schooler could do. According to the CFTCs release: (more…)

Another Insurance Salesman Gone Bad

The challenge is telling the good apples from the bad without taking a bite.

I don’t know what it is about insurance salesmen. It seems to me that there are more bad apples in that barrel than in most. I could sustain a separate blog dealing only with the bad conduct of insurance salesmen and how they lead thousands upon thousands of investors to financial ruin every single year. SEC Enforcement has recently commenced a case against another such specimen. According to the SEC’s release: (more…)

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