“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…)

Bet On the U.S. Marshals

If Price makes it three weeks, we can begin admiring his planning for this ruse.

In one of my recent receivership actions, I got to walk into a house behind two Deputy U.S. Marshals. They were clad in black, wearing their body armor, and looked like they were chiseled out of Georgia granite. They gave us the option of waiting in our cars until they had made sure that there was no one dangerous in the house, but I wasn’t going to miss this chance. Chatting with them afterwards, I learned they had already, that morning, chased down a fugitive through woods, briars, and across creeks, and finally laid hands on a guy who had eluded them for weeks. If the fugitive had gotten a good look at these guys before he started running, he might have saved himself the hassle of being tackled. They looked like they  could run all day, as a warmup. (more…)

Another Day, Another Financial Services Company Caught Stealing From Investors

You can be disgusted, but please don’t say that you are surprised.

You can be disgusted, but please don’t say that you are surprised at the latest revelations of a big financial services company stealing hundreds of millions of dollars from its customers.  The facts are still rolling in about PFGBest after the CEO of the Cedar Falls, Iowa-based international futures broker attempted suicide outside company headquarters. According to The Wall Street Journal: (more…)

Insurance Agent Scam Targets the Elderly

There was a time when your parents protected you. Now is the time for you to return the favor.

Most insurance agents aren’t out to steal your money. Let me say that up front. But many are. Your challenge is recognizing those who are prone to rob you. It is a challenge because (1) you cannot tell the honest ones from the crooks just by sight, and (2) the pressures of everyday life often turn honest agents into dishonest agents seemingly overnight. A recent story from North Dakota tells a familiar tale. According to The Grand Forks Herald: (more…)

Whistleblowers Needed for the Rest of the Story

Having employees motivated to make certain that the investing public knows the truth puts a serious crimp in their ability to profit from cheating.

Between May 2009 and April 2011, Gold Standard Mining Corp. reported on its acquisition and operation of a Russian gold mining company. What it said was true. It had acquired the company and it was operating the company. How could any investor draw negative conclusions from that news? The sticking point was the rest of the story. According to the SEC’s press release: (more…)

Carpetbagging Yankees Rob Southerners

The vast majority of investment scams do NOT sound too good to be true.

The Department of Justice recently won convictions against two Ponzi scamsters in a case involving promises of outrageous investment returns. That case gives us another opportunity to stress that most investment scams won’t look like this one. According to ajc.com: (more…)

The Catch-22 of Unauthorized Trading

I do not care how nice a guy your broker is. Consider him a sociopath.

Why isn’t there a news story every time the state patrol catches a speeder going 20 miles over the limit? Why doesn’t Katie Couric report on every instance in which a business person mildly inflates his or her expense report? Why doesn’t it make the front page of The New York Times every time a politician acts like the spokesperson for a junior high school mean girls clique? Because those things happen every day, several times per day. Even with our 24 hour news cycle and dozens of news channels, there would not be enough time to cover every such story. The same is true for unauthorized trading in brokerage accounts. A recent story from Memphis sets the stage. According to The Commercial Appeal: (more…)

SEC Alleges Cross-Border Fraud By Texas RIA

All RIAs are not created equal.

Last week we posted on a case in which U.S. fraudsters targeted elderly investors in the U.K.  Today brings a story about a U.S. registered investment adviser (RIA) who allegedly defrauded a client in Mexico. According to the SEC’s press release: (more…)

The Eternal Dream of a Crystal Ball

If someone has a machine that can predict stock market movements, he shouldn’t need your money.

It stands to reason that new technology will be able to do things that old technology could not. Maybe that is why we are so prone to believe that someone will someday create technology that accurately and reliably picks stocks poised for a rise. Personally, I’m skeptical, as you should be. According to Bloomberg Businessweek: (more…)

Another Insurance-Based Ponzi?

Ponzi schemes germinate from insurance agencies every day.

We all lead busy lives. Career and family demands are relentless. Who, in the little bit of downtime that they have, wants to spend time studying the intricacies of the financial services industry? But for those of us whose jobs give us intimate knowledge of those intricacies, widespread misconceptions are troubling enough to cost us some sleep now and then. People do not know the legal distinctions between stockbrokers and investment advisers, or between stockbrokers and insurance agents. Most people only know that you can buy investments through any of them. And, whoever said it first deserves credit: “A little bit of knowledge is a dangerous thing.” A case out of New Mexico makes the point. According to Las Cruces Sun News: (more…)

Another Aussie Ponzi?

Cautionary thoughts don’t stand a chance in the presence of all of that positive feedback.

Recemtly, we learned of yet another alleged Ponzi from Australia. According to PerthNow: (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…)

Feds Allege $400 Million Ponzi

Scores of brokerage firms and hundreds of stockbrokers will be kicked out of the industry this year for unethical or illegal conduct.

According to the U.S. Department of Justice, a registered broker-dealer and several of its employees ran a five-year Ponzi scheme from the firm’s headquarters on Long Island, ultimately taking in more than $400 million and costing the 4,000 victims of the scheme more than $170 million in losses. According to a story by Jessica Dye of Reuters: (more…)

Post-Madoff Ponzi Boom in Full Swing

Unfortunately, your innate people sense will do you no good.

Bernie Madoff turned himself in in December 2008. The same day, hundreds of Ponzi schemes collected their first dollar. Because we were all transfixed by the biggest Ponzi scheme in history, it was easy to think that Madoff’s demise marked the end of  a Ponzi age. Really, though, his story was but one chapter in a never ending story of investment fraud.  This week, the SEC took emergency enforcement action against what it believes is an ongoing Ponzi scheme that began more than a year after Madoff’s surrender. According to the SEC’s press release: (more…)

Former Wells Fargo Broker Shown the Door

Vigilant investors long ago jettisoned romantic notions of the stockbroker as protector of the nest egg.

A recent enforcement action from the Financial Industry Regulatory Authority (FINRA) answers one of the questions I get most often: “If I’m with a big name brokerage firm, I don’t have anything to worry about, right?” According to FINRA, Ralph Edward Thomas Jr., while a representative for Wells Fargo Advisors, stole money from many of his clients. One of the accounts from which he stole was set up to benefit a child suffering from cerebral palsy. According to a story from Investment News: (more…)

Kiwi to Face Aussie Charges in June

It is rare these days for a scamster to confine his operations to a single jurisdiction.

One of the more satisfying things about hosting InvestorsWatchblog is seeing where our readers are from. More than half are from outside the United States. We therefore love to cover stories of alleged investment fraud beyond the States. Our brothers and sisters down under will be treated to headlines this summer from a case that spans the globe. According to Stuff.co.nz: (more…)

Beware the Escrow Account

The scamster bag of tricks is bottomless.

The number of investment frauds involving supposed escrow accounts appears to be on the rise. I’ve seen several over the past two years, including one involving a $38 million international hedge fund fraud. Investors were told that their money would sit safely in an escrow account and would not be moved from that account without their consent. Of course, once investor money hit the account the scamsters quickly transferred it out, with the investors none the wiser, until it was too late. Prosecutors in Virginia believe that they have found a scam using a similar ruse. According to WUSA9.com: (more…)

FBI Nabs Fugitive in the Land of 10,000 Scams

A vigilant investor can step outside his or her thoughts and analyze them.

Dan Browning covers investment fraud for the StarTribune. He’s covered the Trevor Cook case, the Tom Petters case, and the innumerable other investment cons that have swindled investors worldwide. Last week, Dan covered the story of Michael J. Murphy, whom the FBI arrested in a mental hospital in Fargo, North Dakota. Murphy, it seems, had failed to appear at a court hearing in North Carolina to answer charges that he participating in a Ponzi scheme. Browning writes: (more…)

Alberta Regulators Halt Alleged Bridge Financing Ponzi

If you know of an investment making the same claim, please report it to local regulators.

TransCap Corporation came into existence in 2001. Operating from headquarters in Calgary, Alberta, it traded bonds and provided bridge financing.  A related company, Strata Corporation, came along in 2008 with a stated purpose of raising funds to loan to TransCap. The Alberta Securities Commission alleges that both companies were part of a Ponzi scheme that reaped more than $50 million. According to SunNews: (more…)

Academic Study Confirms IW Observations

Just as with Congress, staunchly ethical people enter the securities industry and face daily pressure to compromise those ethical principles for the sake of advancement or continued employment.

The securities industry chalks it up to a few bad eggs; advisers and brokers who take advantage of their customers for big commissions and fees. My experience has taught me that the problem is systemic. Brokerage firms are for-profit corporations. They’re bottom line is dependent on their salespeople (brokers) earning every dollar of commission possible. The source of those commission? You. This week, The Wall Street Journal reported the results of an academic study which confirms what I’ve seen from ground level for more than two decades. According to The Wall Street Journal: (more…)

professional wordpress themes