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 HuddlestonP@sec.gov. (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…)

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…)

Destined for the Prison Band

The really dangerous characters look exactly like legitimate businesspeople.

What if you discovered, in your parent’s basement, a recording of unreleased tracks from The Rolling Stones, The Beatles, and Carlos Santana? Those would be worth something, wouldn’t you think? So did many other people who invested with Marino deSilva, who said he owned those recordings. deSilva told prospective investors that part of the money generated from the digital remastering and release of the recordings would benefit charity. Instead, he spent the money living the life of a rock n roll star, and keeping up appearances by making Ponzi payments to early investors. According to a Forbes story about the scam: (more…)

“Unprecedented Rise in Investment Fraud”

“If it sounds too good to be true . . .” is a pathetic excuse for wisdom.

For three years now, we’ve been warning that a tsunami of investment fraud is breaking over the investment community and that the destruction will make us forget Bernie Madoff. It turns out that federal prosecutors have come to the same conclusion. According to the Wall Street Journal: (more…)

Making a Killing at 42 Cents Per Share

That model is a one way ticket to penury.

How do you make a killing on a stock trading at 42 cents per share? Buy it for a penny a share. Millions of investors see that model as their ticket to financial freedom. They hope to buy the next Google for peanuts and ride it all the way to vast wealth. As a recent case from SEC Enforcement shows, though, that model is a one way ticket to penury. According to the SEC’s release: (more…)

The Heart of the Matter

They nevertheless operate inside a business structure that constantly pressures them to compromise that duty for the sake of revenue.

The Atlanta Office of the SEC has filed an enforcement case that gets to the heart of the customer/stockbroker relationship. According to the SEC’s press release: (more…)

Altering the Report Card

Some have given into it and made a bad choice in response to that temptation.

I wonder if, like me, you ever had a report card that you didn’t want to show to your parents.  I wonder whether you ever earned a D and thought how, with an artful stroke of a pen, it could be made to look like a B. If not, you, like the rest of us humans, have had a moment in which you hoped that no one would discover your poor performance in some arena. You feared the consequences of that performance. The SEC has cooperated with criminal prosecutors to secure a conviction of two corporate officers who found themselves in just that situation. According to the SEC’s release: (more…)

The Power of Celebrity

You might just uncover a scam and alert regulators before it has a chance to hurt others.

Celebrity is powerful. A chance to be associated with someone who has succeeded in the dog eat dog world of Hollywood seems like a no brainer. If I could just hook my wagon to that established star, we are inclined to think, just imagine how far I could go? Scam artists know the power of that thought and often hijack the hard won success of performers. Regulators in New England believe they have caught just such a character. According to the Union-Leader: (more…)

Vanderbilt Securities Broker Steals From Clients

Your personal b.s. detector isn’t ‘broken;’ it never worked reliably in the first place.

It happens every day. Several times a day. A stockbroker convinces one of his customers that he’s identified a profitable investment. He describes it in glowing terms and gets the customer to agree to the purchase. The broker then sends the customer’s money to a company that he controls and spends the money on his own personal obligations. The SEC has caught another such character in Connecticut. According to the SEC’s release: (more…)

A Single Vigilant Investor Would Have Saved $25 Million

There is a force more powerful than Congress, more powerful than the SEC, more powerful than the FBI- a single vigilant investor.

I write about a new investment scam every weekday, and usually have to leave several unwritten about; that’s how many investment frauds are operating at all times. Particularly tragic are those cases in which a single vigilant investor, trained in how to do a proper due diligence investigation, could have closed the scam before it raised its first $10,000. The SEC has shut down just such a scam in Florida. According to the SEC’s press release: (more…)

Poland Joins The Club

Institutional investors and very wealthy individuals are just as susceptible to this kind of fraud as first time investors.

It’s the rare country that hasn’t seen at least one large investment fraud in the headlines over the past few years. We’ve written about most of them. Today’s story welcomes another country into that sad club. According to newser.com: (more…)

Crystal Ball Right Again

As much as you think otherwise, these scams are so slick that you’ll never see them coming unless you know more about them.

When I first launched the Investor’s Watchdog website, I took the opportunity to look into the future of investment fraud and created a page called Crystal Ball. Among the types of scams that we anticipated seeing with more frequency were health care scams. The Atlanta office of the SEC believes that it has found another such scam. According to the SEC’s press release: (more…)

Double Affinity Fraud

Chances are that, by that point, many members of the group have already set fire to their nest eggs without even knowing it.

You name the group and the chances are that it has been targeted by an affinity fraudster. On this blog we’ve written about affinity frauds targeting immigrants, ex-patriots, retired bus drivers, Ferrari owners, the blind, the deaf, Jews, Muslims, Christians, Hindus, and many other groups. Last week came word from the Commodity Futures Trading Commission (CFTC) of an alleged affinity fraud that targeted members of two distinct groups, both of which have been the target of affinity fraudsters before. According to the CFTC: (more…)

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