Investment Fraud Lawyer Blog

Elder financial abuse is an “epidemic” and likely to become much worse given that 77 million baby boomers are entering their so-called “retirement” years (See “Golden years? Financial elder-abuse now epidemic,” Andrew Osterland, InvestmentNews). Between 500,000 and 5 million elders are abused, neglected or exploited each year, and the abuse is often unreported. “Elders can be afraid to report abuse, for a variety of reasons,” one practitioner was quoted as saying, adding: “In many cases, they may depend on the abuser and fear reprisals from them. They may be afraid of being placed in a nursing home or dread the stigma of domestic violence.”

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Approximately 81% of 974 surveyed investors said that they expect their financial advisor to be able to explain the array of investment products on the market today (See InvestmentNews, “Clients: So many investment products, so little understanding”). “Advisers must stay on top of the latest investment products because many investors say they're overwhelmed by investment choices and find many to be overly complex,” according to the article.

Continue reading "Client Trust - Why Honest Financial Advice Is So Important" »

City Capital Corp. and two former executives operated an $11 million Ponzi scheme that targeted socially conscious investors in church settings, according to charges by the Securities and Exchange Commission.

Continue reading "SEC Accuses City Capital Corp. and Ephren Taylor of Affinity Fraud" »

The North American Securities Administrators Association (NASAA), an organization comprised of the 50 state securities regulators, believes that the crowd funding provisions of the so-called JOBS Act are just another “Regulation D-like rip-off,” according to InvestmentNews (“Crowd funding draws scorn from NASAA,” by Mark Schoff Jr.). Regulation D provides a registration exemption for certain investments that are privately offered – i.e., not offered by means of a general solicitation to the public at large.

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CFO.com, a publication geared specifically for finance executives, says that the JOBS Act may not be all it’s cracked up to be, as there are both more new regulations and less incentives for start-ups to go public than has previously been reported in some financial publications (“JOBS Act Turns Spotlight on Crowdfunding,” by Sarah Johnson, CFO.com, April 5, 2012).

Continue reading "Crowdfunding Law Raises Many Questions" »

U.S. News & World Report has posted an article to help investors deal with the constant bombardment of unsolicited sales pitches and investment advice, which could be great, but is more likely substandard, and may be deadly. The article by David Ning, “7 Ways to Avoid Financial Product Scams,” purports to present “seven ways to pick out the gems from the duds.” Frankly, picking out “the gems from the duds” is not what the article is about. It does contain some pretty good general advice though. We have added some comments as well.

Continue reading "How to Avoid a Financial Product Scam" »

While fraudsters are with us always, they are especially active in times like these when extremely low interest rates and stock market volatility have made conventional stock and bond investments unattractive and have given rise to a multitude of alternative investments, some of which may be fraudulent. To help combat this, the Certified Financial Planner Board of Standards, Inc. has put out a booklet called “Consumer Guide to Financial Self-Defense,” which features 10 “red flags” of fraud. It is the subject of a recent article in SmartMoney.com entitled “How to Fend Off Financial Fraudsters.”

Continue reading "Some Red Flags of Financial Fraud" »

Affinity fraud is a big problem and it is growing. The affinity aspect of it refers generally to the fraudster’s standing as an insider among a group of people who share a common interest. This standing as a member of the group, so to speak, makes the fraudster presumptively trustworthy. Unfortunately, affinity settings are breeding grounds for investment fraud.

Continue reading "Affinity Fraud Hits Close to Home" »

The Financial Industry Regulatory Authority (FINRA) recently issued a report outlining is its regulatory and examination priorities for 2012. The securities industry regulator is focusing on conduct and products meant to beat the market that are unsuitable investments for many investors.

Continue reading "Securities Regulator Alerts the Public About Dangerous Investments and Investment Strategies" »

The Wall Street Journal has reported that financial scams against the elderly are becoming so commonplace that the National Council on Aging calls them the “crime of the 21st century” (“Scams to Watch Out For,” WSJ). It describes investment scams against baby boomers (those over age 50) as being “rampant.” (“Boomers Wearing Bull’s-Eyes,” WSJ, Kelly Greene). The Wall Street Journal has now published a brief but helpful article entitled “Red Flags of Elder Fraud.”

Continue reading "Some Warning Signs of Elder Fraud" »

Preparing for retirement should include preparing for the risk of diminished mental capacity, according to noted financial writer Jane Bryant Quinn (“Losing Your Grip?”). It is an unpleasant fact of life that, as we age, we become less competent to make financial decisions. A 2009 study on financial decision-making found that this ability peaks at age 53 and declines thereafter, according to Ms. Quinn’s article. Another study at Texas Tech University revealed that what we lose 2% of what we used to know about financial matters each year after age 60, but, paradoxically, we gain confidence as we lose this knowledge. All of this makes us vulnerable to serious financial errors and even fraud, according to Ms. Quinn.

Continue reading "AARP Article Urges Seniors to be Vigilant in Watching Out for Financial Scams" »

The Securities and Exchange Commission has charged an Illinois-based advisor with selling fictitious securities via social media. Anthony Fields, CPA, doing business as Anthony Fields & Associations and Platinum Securities Brokers offered over $500 billion of phony securities through a variety of social media sites, including using LinkedIn discussions to promote nonexistent “bank guarantees” and “medium-term notes.” Many potential buyers indicated they were interested.

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The Houston Athletics Foundation, which funds athletic scholarships for the University of Houston, is apparently the victim of a major ponzi scheme perpetrated by David Salinas, a Houston-based money manager. Approximately, $2.2 million (over 40 percent) of the Foundation’s assets are unaccounted for, having been supposedly invested in bonds that never existed. The ponzi scheme involved $39 million raised from more than 100 investors, including numerous high-profile college coaches.

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Promoters of fraudulent investments are targeting the 77 million baby boomers in the U.S. who make up 25 percent of the population, according to securities regulators and prosecutors (“Boomers Wearing Bull’s-Eyes,” Wall Street Journal, Kelly Greene). Regulators expect to file a record number of enforcement actions involving investors age 50 years and older, as financial fraud against boomers is “rampant” throughout the nation, according to the article.

In 2010, there were 1,241 criminal and civil regulatory fraud actions involving investors age 50 and over, versus 506 cases in 2009, according to the North American Securities Administrators Association (NASAA), the association of state securities regulators. Unfortunately, the number of enforcement actions is tiny compared to the number of actual fraud cases out there.

Continue reading "Investment Fraud Against Older Americans Is 'Rampant'" »

Even in today’s turbulent economy, many people dream of retiring early and living off of their investments. On occasion, unscrupulous investment advisers have been known to take advantage of this wish by promoting deceptive early retirement schemes. This problem has become a big enough problem that the SEC and FINRA have started warning investors to beware.

Continue reading "Securities Regulators Warn Investors about Early Retirement Scams" »

Knowledge about financial matters falls 2% each year after age 60, while, at the same time, confidence in being financially knowledgeable increases, according to a study done by Michael Finke, an associate professor at Texas Tech University and other entitled “Old Age and the Decline in Financial Literacy."

Continue reading "Study - Investors Over Age 60 Are More Vulnerable to Financial Fraud" »

Investment fraud accounts for $40 billion in investor losses per year, according to the association of state securities regulators called the North American Securities Administrators Association (NASAA). Con artists take advantage of fear as well as greed, and fear of running out of money is prevalent these days.

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The time is ripe for financial scammers who seek to take advantage of senior investors. Recently a 76-year-old Texas insurance agent was sentenced to up to 15 years for selling fake annuities to other elderly investors. The scammer in this case just happened to be the same age as many of his elderly victims. Mr. Langford apparently stole close to $7 million from dozens of clients through the sale of phony “private annuities” and promissory notes that promised interest rates as high as 9%.

Continue reading "Seniors Are Increasingly Targeted in Financial Scams" »

Affinity investment fraud is a big problem in the United States, according to regulators. Fraudsters take advantage of a presumption in the minds of victims that a person with whom you have something in common is trustworthy. That this is not necessarily so was demonstrated once again when deaf investors lost $3.45 million to “one of their own,” a deaf investment advisor. According to a recent InvestmentNews article by Liz Skinner entitled “Deaf investment adviser defrauded 7,000 deaf clients: SEC.”

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The association of state securities regulators known as NASAA has released its top 10 investment traps. NASAA finds that scam artists are peddling various get-rich-quick schemes to take advantage of the economic uncertainty. According to NASAA, investments that investors should be particularly wary of include distressed real estate schemes, energy investments, gold and precious metal investments, promissory notes, and securitized life settlement contracts. Tactics used to peddle such investments often involve affinity fraud, bogus or exaggerated credentials, mirror trading, private placements, and securities and investment advice offered by unlicensed agents.

Continue reading "Securities Cops Issue Warnings about Current Investment Scams" »