Fraudsters may be good at their game,
but when you recognize their promises as warning signs,
you’re on your way to fraud-proofing yourself.
You also have to reject those promises
and report people who make them.
Meet David.
He’s a suave, smooth-talking scammer at the top of his game.
David will go to great lengths to gain your trust
so he can steal your money - making up a fake investment scheme,
creating a bogus company,
even joining your church or club to get to know you better.
Now, meet Jean.
Jean is an empowered investor
who has learned how to fraud-proof herself,
so she won’t be taken in by someone like David.
That's what we are talking about today -
how to recognize, reject and report investment fraud.
Let’s start by recognizing
the 5 warning signs of investment fraud.
Promising a high return with no risk
and throwing in a guarantee for good measure,
is the fraudster’s favorite ploy. Every investment has risk.
In fact, there’s no such thing
as a high-return, low risk investment.
If you hear of one, report it.
Fraudsters love to say that they have inside information
about a very special investment
that’s available only to a select few
who are making a lot of money. Don’t fall for it.
Legitimate investments are not secret.
Fraudsters play on people’s desire to reduce their tax bill.
A favorite pitch is to say an investment is tax-free
because it’s “offshore”, but that’s a lie.
It’s okay to shelter your taxes, but it’s illegal to dodge them.
And “offshore” is just a fancy way of saying your money is going
beyond the reach of authorities that can help you.
Scammers use pressure tactics
to trick you into making a quick decision.
But sometimes, the best investment you make
is the one you don’t make.
There’s always time to make a big decision.
Fraudsters often target closely-knit groups of people
who share the same beliefs and interests.
They may join your church or club,
or be a member of your ethnic group or extended family.
Never let trust override your common sense.
If you hear the warning signs of investment fraud, beware.
No matter how well you know the person.
Just about anyone can fall for an investment fraud,
even after a lifetime of careful saving
and prudent financial decisions.
That’s what happened to Fran.
Fran was a widow with two teenage children.
She was looking for a safe place to invest a small inheritance.
Fran’s friend, Bob, told Fran
he had made money from a great offshore investment
through a fellow in their community, John,
who knew a “financial whiz.”
John was a trusted community leader, a former city councilor,
who offered estate planning and investment seminars
at the Senior Center.
Fran trusted Bob. And Bob trusted John.
What Fran didn’t know was that John’s “financial whiz”
was someone who had already been caught breaking securities laws -
Stephen.
John said that Stephen could get Fran 12%-25% for a 2-year term.
He said it was a safe investment
and he guaranteed that she wouldn’t lose her money.
Fran was a cautious person.
This was all the savings she had
and she couldn’t afford to lose it.
But John told her this opportunity was such a sure thing,
he had refinanced his own house to invest in it.
He promised he would personally cover Fran’s losses
if there were any.
That sounded pretty safe, so she put her money in.
Fran received some glowing reports about her investment.
Then, poof, nothing - the company collapsed.
Stephen disappeared and Fran lost her entire nest egg.
Unfortunately, Fran’s is a true story.
She was one of 27 people, mostly seniors,
who invested $1.5 million
in Stephen’s Ponzi scheme in Kamloops, British Columbia.
If she had recognized the warning signs of investment fraud,
things would have turned out very differently.
Recognizing the warning signs of investment fraud is just
good, common sense.
Yet, people who fall for investment scams, typically say
that they didn’t see anything wrong.
And by the time they realized what had happened,
their money was gone.
Don’t let it happen to you.
Learn to recognize these promises for the warning signs they are.
Next, find out how to reject investment fraud once you do.
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