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Vancouver Case Reveals Shocking Lapse in Protection for Canadian Investors

Only the well trained should venture forth.

Among the advice that I give most often on this blog is to always call your state securities commissioner to find out whether the person offering you an investment is licensed to do so. My unscientific estimate is that we could wipe out 20 percent of annual investment fraud losses by convincing everyone to take this one easy precaution. But, it seems, that advice would not help Canadian investors. According to The Vancouver Sun: (more…)

Article Highlights The Mob’s Involvement in Investment Fraud

Keeping your money safe from organized criminals is not as easy as you think.

A fascinating article in the National Post of Canada breaks down the type of investment fraud most often committed in each of the Canadian provinces. Some provinces are known for pump and dump schemes. Others are hotbeds of Ponzi schemes. What is really eye-opening about the article is the degree to which it exposes organized crime’s involvement in investment fraud. According to the article (which you should read in its entirety): (more…)

At Last, A Cure for Baldness

Until you diagnose and treat cognitive biases, you’ll never be safe from investment fraud.

You don’t have to be bald yourself to understand the appeal of a device that promises to re-grow hair. Most healthy adult men eventually face the awful truth in the mirror. Hair growing everywhere — ears, nose, back — except where it’s supposed to grow. Imagine how well a company could do if it discovered a reliable way to regrow hair on the male scalp, guaranteed. Well, several people were able to imagine it and wanted in. They bought shares of a company called Follicles Worldwide from a former mutual fund salesman named Ronald Conn and his wife, Ella. According to the Vancouver Sun: (more…)

MD and DDS Draw Scamsters Like Honey Draws Bears

In more than two decades of protecting investors, I have seen more dentists and doctors lose hundreds of thousands of dollars each to investment fraud than you could fit on the playing field at your closest major league ballpark.

The Ontario Securities Commission (OSC) has filed charges against Peter Sbaraglia and his wife Mandy, both dentists, alleging that they were important cogs in a Ponzi scheme that robbed victims or more than $50 million.  According to the charges, many of the Sbaraglia’s alleged victims were fellow dentists.  If proven, this would add dentists to the long list of groups that have been victimized by what the U.S. Securities and Exchange Commission calls affinity fraud.  But the bigger story, the one rarely told, is the extent to which professional scamsters target dentists and medical doctors.  In my days at the SEC, we used to joke that if more than two doctors were invested in anything, it was likely a scam.  Doctors are targeted that often.  In more than two decades of protecting investors, I have seen more dentists and doctors lose hundreds of thousands of dollars each to investment fraud than you could fit on the playing field at your closest major league ballpark. (more…)

SEC Charges Investor Relations Company in Alleged Pump and Dump Scheme

Separating the wheat from the chaff is difficult and only getting tougher as technology makes it easier to create a convincing phony.

America does innovation very well.  There are small companies around that will, in five years, be the darlings of Wall Street. Their shareholders will cheer as the stock price rises along with the revenues from the new technology, medicine, or other innovation.  Unfortunately, there are other small companies that are nothing more than vehicles for a fraud.  The U.S. Securities and Exchange Commission has filed an enforcement action in a case that illustrates the danger.  According to the SEC’s press release: (more…)

Ninja Appears in Ponzi Case

Those who operate these scams have imaginations as big as their appetite for money.

In September 2009 we wrote a three-part blog series on the Syndicated Gold Depository, S.A. (“SGD”) Ponzi scheme,which bilked more than $100 million from more than 3,000 investors across the globe.  According to the Royal Canadian Mounted Police (RCMP), Gary Sorenson and Milowe Brost lured people into investments in SGD which was supposed to loan investor money out to another company, Merendon Mining Corp. Ltd., (MMC) at interest rates that would provide a healthy return for investors.  The SGD scam operated for more almost ten years, from 1999 to 2008.   The RCMP arrested Brost but took longer to track down Sorenson who had a home in Honduras.   (more…)

Australian Ponzi Scamster Pleads Guilty

Australian Ponzi Scamster Pleads Guilty

Ponzi schemes are as prevalent down under as they are the United States in Europe.  The Australian Securities and Investment Commission (“ASIC”) has shut down a scamster operating in Kew, Victoria.  Mrs Hazel Bernice Bucello, who operated Victorian Finance Broking Services Pty Ltd (“VFBS”), pleaded guilty to defrauding more than $2.5 million from five investors by promising them that their money would be used to provide “birdge financing” and that investors would receive four to five percent per month in interest payments.  Rather than use the money as promised, Bucello used the money of later investors to make payments to earlier investors to lull them into believing that the scam was legitimate. (more…)

UK’s Financial Services Authority Warns of Scamsters Impersonating Authorized FSA Firms

UK’s Financial Services Authority Warns of Scamsters Impersonating Authorized FSA Firms

The UK’s Financial Services Authority is warning investors about a new tactic used by boiler room stock operations, which use high pressure sales tactics to force risky securities onto unsuspecting investors.  According to the FSA, unscrupulous operations are posing as brokerage firms that are authorized by the FSA.  The illegitimate operation may even clone the website of an authorized firm, changing only the telephone number and address, to fool investors.  The FSA advises:

Should anybody receive an unsolicited call or email from a firm which they are not a customer of, the FSA is recommending that people should take the following steps:

  • ask for the contact details of the person calling you;
  • check the firm or individual’s status on the FSA register;
  • call the firm back on the switchboard number provided on the FSA register to make sure that the call came from the legitimate authorised firm.

Anybody who has been contacted by a suspicious firm or has any doubts should report the encounter as soon as possible by calling the FSA on 0300 500 5000 or reporting it online.

This warning from the FSA points out the challenge facing every investor: knowing who to trust.  Every scam artist portrays himself as someone he is not.  This is just the latest variation of that practice.  If all you know about a broker is what you learned from him or what you read on a website he or his employer created, you are at great risk of losing everything you have worked and saved for.  Learn what the broker his not telling you by asking an investor protection company to do a pre-investment investigation.

SEC Charges Two Sacramento Men with Stealing $10 Million

SEC Charges Two Sacramento Men with Stealing $10 Million

According to the U.S. Securities and Exchange Commission, Lawrence “Lee” Loomis and his father-in-law John Hagener defrauded 100 investors out of $10 million by soliciting investments in supposed loans to homebuyers to be secured by real estate deeds of trust. According to the SEC, the defendants told prospective investors that the investments would be put into safe “liquid high-yield accounts” earning 12 percent and that the investments were guaranteed by a third party. (more…)

The Wrong Kind of Help

This time last year four people (three men and a woman), clad in bullet proof vests, wearing ear-pieces, and sporting at least one stun gun walked into the Folsom, California offices of Equity Investment, Management and Trading Inc.,  operated by accused Ponzi artist Anthony Vassallo, and said that they worked for the FBI and the Securities and [...]

This time last year four people (three men and a woman), clad in bullet proof vests, wearing ear-pieces, and sporting at least one stun gun walked into the Folsom, California offices of Equity Investment, Management and Trading Inc.,  operated by accused Ponzi artist Anthony Vassallo, and said that they worked for the FBI and the Securities and Exchange Commission.  They demanded that Vassallo wire more than $300,000 to a specified bank account.  Vassallo wired no money.  Likely, there was no money left.  As it turns out, the four were trying to recover the investments of four victims of the alleged Ponzi scheme.   (more…)

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