How They Work and How to Avoid
The Multi-Billion Dollar Business
of Investment Fraud
Americans are investors. We
purchase stocks and bonds, contribute to savings programs, own real estate,
participate in futures and options markets, acquire collectibles, provide
start-up capital for new business ventures, buy franchises, and the list
goes on. The strength of our economy is in large measure the product of
our combined investments.
Perhaps more so than any people
in the world, we enjoy an ever-expanding variety of investments to choose from, coupled with the freedom to make our own investment decisions. It's
our money and we can invest it as we wish.
Unfortunately, some unscrupulous
promoters abuse our freedom to choose by concocting investment schemes
that have zero possibility of making money for anyone other than themselves.
Such persons promise investment rewards they cannot possibly deliver and
have no intention of delivering.
They are swindlers.
Many of them are very good
at it. Their annual take through lying and deceit is in the billions of
dollars. If one estimate of $10 billion a year lost to investment fraud
is accurate, that's more money than the combined annual profits of the
nation's three major automakers! Some say even that estimate may be too
Successful investment swindlers
use every trick in the book, and some that aren't even recorded, to convince
you that none of the descriptions and precautions in the following pages
applies to them. After all, they are offering you a once-in-a-lifetime
opportunity to make a lot of money quickly and you do trust them,
don't you? As will be seen, some of their methods of gaining your
trust are truly ingenious.
Who are the Investment
They are a faceless voice on
a telephone. Or a friend of a friend. They may perform surgery on their
victims' savings from a dingy back office or boiler-room or from an opulent
suite in the new bank building. They may wear three-piece suits or they
may wear hard hats. They may have no apparent connection to the investment
business or they may have an alphabet-soup of impressive letters following
their names. They may be glib and fast-talking or so seemingly shy and
soft-spoken that you feel almost compelled to force your money on them.
The first rule of protecting
yourself from an investment swindle is thus to rid yourself of any notions
you might have as to what an investment swindler looks like or sounds
like. Indeed, some swindlers don't start out to be swindlers. There are
case histories in which individuals who held positions of trust and esteem--accountants,
attorneys, bona fide investment brokers and even doctors--have sacrificed
their ethics for the fast buck of running an investment scam.
In still other cases, investment
programs that began with legitimate intentions went sour through happenstance
or poor management--leading the promoter to mishandle or abscond with
investors' capital. Whether an investment is planned as a scam or simply
becomes one, the result is the same.
This is why, as we will discuss,
protecting your savings against fraud involves at least three steps: Carefully
check out the person and firm you would be dealing with; take a close
and cautious look at the investment offer itself; and continue to monitor
any investment that you decide to make. No one of these precautions alone
may be sufficient.
Who are the Victims
of Investment Fraud?
If you are absolutely certain
it could never be you, the investment swindler starts with a
big advantage. Investment fraud generally happens to people who think
it couldn't happen to them.
Just as there is no typical
profile for swindlers, neither is there one for their victims. While some
scams target persons who are known or thought to have deep pockets, most
swindlers take the attitude that everyone's money spends the same. It
simply takes more small investors to fund a large fraud. In fact, some
swindlers deliberately seek out families that may have limited means or
financial difficulties--figuring such persons may be particularly receptive
to a proposal that offers fast and large profits. A favorite pitch is
that small investors can become rich only if they learn and employ the
investment strategies used by wealthy persons. Naturally, the swindler
will teach them!
Although victims of investment
fraud can differ from one another in many ways, they do, unfortunately,
have one trait in common: Greed that exceeds their caution. Plus a willingness
to believe what they want to believe. Movie actors and athletes, professional
persons and successful business executives, political leaders and internationally
famous economists have all fallen victim to investment fraud. So have
hundreds of thousands of others, including widows, retirees and working
people--people who made their money the hard way and lost it the fast
How Investment Swindlers
Find (or Attract) Their Victims
Swindlers attempt to mimic
the sales approaches of legitimate investment firms and salespersons.
Thus, the fact that someone may contact you in a particular way--by phone,
mail, or even through a referral--should not in itself be viewed as an
indication that the investment is or isn't shady. Many totally reputable
firms also use the same methods to effectively and economically identify
individuals who may have an interest in their investment products and
services. Bearing in mind that investigating before you invest is good
advice no matter how you are approached, these are some of the methods
con men commonly employ to contact their victims-to-be.
So-called telephone boiler-rooms
remain a favorite way for swindlers and their sales squads to quickly
contact large numbers of potential investors. Even if a swindler has to
make 100 or 200 phone calls to find a mooch (one of the terms swindlers
use for their victims), he figures that the opportunity to pocket thousands
of dollars of someone's savings is still good pay for the time and cost
Some sellers of fraudulent
investment deals buy bona fide mailing lists--names and addresses of persons
who for example, subscribe to a particular investment-related publication,
who have responded to previous direct mail offers, or who have other characteristics
that swindlers look for. In the hope of avoiding notice by postal authorities,
mail order swindlers may not make a direct or immediate pitch for your
money. Rather, they often seek to entice you to write or phone for more
information. Then comes a call from the salesperson or the person who
closes the deal. Some may phone even if you didn't respond to the mailing.
A newspaper or magazine ad
may offer (or at least hint at) profit opportunities far more attractive
than available through conventional investments. Once you've taken the
bait, the swindler will then attempt to "set the hook." Even
though investment crooks know that regulatory agencies regularly monitor
ads in major publications, some nevertheless use such publications in
the hope of being able to hit-and-run before an investigator shows up.
Others advertise in narrowly circulated publications they think regulators
may be less likely to see.
One of the oldest schemes going
involves paying fast, large profits to initial investors (actually from
their own or other peoples' investments) knowing that they are likely
to recommend the investment to their friends. And these friends will tell
their friends. Soon, the swindler no longer needs to find new victims;
they will find him.
Some swindlers go first class.
Using profits from previous swindles, they rent public offices, hire an
interior decorator and professional-sounding receptionist and open what
has the appearance--but not the reality--of a reputable investment firm.
You may even have to phone for an appointment, and once there don't be
surprised to be kept waiting (that's intended to make you all the more
eager). This kind of swindler's success depends on how long he can keep
his victims from knowing they are being cheated. Investors are assured
that their large profits are being reinvested to earn even larger profits.
Such a swindler may join local civic groups, contribute to charities,
and generally play the role of solid citizen.
Their techniques are as varied
as their methods of establishing contact. If there is a common denominator,
however, it is their ability to be convincing. The skills that
make them successful are essentially the same skills that enable any good
salesperson to be successful.
But swindlers have a decided
advantage: They don't have to make good on their promises. In
the absence of this responsibility, they have no reluctance to promise
whatever it takes to persuade you to part with your money. These are some
of their techniques:
-Expectation of Large
The profits a swindler talks
about are generally large enough to make you interested and eager to invest--but
not so large as to make you overly skeptical.
Or he may mention a profit
figure he thinks you will consider believable and then, as a further enticement,
suggest that the potential profit is actually far greater than
that. The latter figure, of course, is the one he hopes you will focus
on. Generally speaking, if an investment proposal sounds too good to be
true, it probably is.
Some are so blatant as to suggest
there's no risk--that the investment is a sure money maker. Obviously,
the last thing a swindler wants you to think about is the possibility
of losing your money. (If you ask how you can be certain your
money is safe, you can count on a plausible-sounding answer. Besides,
at this point, he figures you will believe what you want to believe.)
To make his pitch more credible,
a swindler may acknowledge that there could be some risk--then quickly
assure you it's minimal in relation to the profits you will almost certainly
make. A con man may become impatient or even aggressive if the question
of risk is raised--perhaps suggesting that he has better things to do
than waste time with people who lack the courage and foresight needed
to make money! With this kind of put down, he hopes you won't bring up
the subject again.
There's usually some compelling
reason why it's essential for you to invest right now. Perhaps
because the investment opportunity can "be offered to only a limited
number of people." Or because delaying the investment could mean
missing out on a large profit (after all, once the information he has
confided to you becomes generally known, the price is sure to go up, right?).
Urgency is important to a swindler.
For one thing, he wants your money as quickly as possible with a minimum
of effort on his part. And he doesn't want you to have time to think it
over, discuss it with someone who might suggest you become suspicious,
or check him or his proposal out with a regulatory agency. Besides, he
may not plan on remaining in town very long.
They don't call them con men
for nothing! They sound confident about the money you are going to make
so that you will become confident enough to let go of your savings.
Their message is that they are doing you a favor by offering the investment
opportunity. A swindler may even threaten (pleasantly or otherwise) to
end the discussion by suggesting that if you are not really interested
there are many other people who will be. Once you protest that you are interested, he figures your savings are practically in his pocket.
Although you can't necessarily
spot a con man by the way he talks, most are strong-willed, articulate
individuals who will dominate the conversation--even if they do it in
a low-key friendly sort of way. The more they talk, the less chance you
have to ask questions.
Swindles and How They Worked
There's a saying among swindlers
that it's not the scam that counts, it's the sell. Judging
from the number of arcane and often outlandish schemes that have been
employed to separate otherwise prudent people from their money, the saying
would seem to reflect reality. The evidence is that if people can be made
believers, they can be sold practically anything. Consider several of
the ways in which hustlers of phony investments have won the confidence
of persons whom they planned to victimize.
It's become one of the oldest
and most often employed investment schemes because it's proven to be one
of the most lucrative. While there are innumerable variations, here is
how a person we will call Frank C. practiced it. At the outset, Frank
approached a relatively small number of influential persons in the community
and offered them the opportunity to invest--with a guaranteed high return--in
a computer-generated program of arbitrage in foreign currency fluctuations.
To be sure, it sounded high tech and sophisticated but Frank had his eye
on sophisticated and well-heeled victims.
Within a short period of time,
he approached and sold the scheme to still other investors--then promptly
used a portion of the money invested by these persons to pay large profits
to the original group of investors. As word spread of Frank's genius for
making money and paying profits, even more would-be investors anxiously
put up even larger sums of money. Some of it was used to recycle the fictitious
profit payments and, like a pebble in the water, the word of fast and
fabulous rewards produced an ever-widening circle of eager investors.
And more money poured in. And Frank C. left town a wealthy man.
The Infallible Forecaster
Jim L. (among his many aliases)
had a full-time job in the daytime, but with assets that consisted only
of a phone, patience and an easy way of talking he managed to parlay a
nighttime sideline into an ill-gotten fortune. The routine went like this.
Jim would phone someone we'll
call Mrs. Smith and quickly assure her that, "No," he didn't
want her to invest a single cent. "Never invest with someone you
don't know," he preached. But he said he would like to demonstrate
his firm's "research skill" by sharing with her the forecast
that so-and-so a commodity was about to experience a significant price
increase. Sure enough, the price soon went up.
A second phone call didn't
solicit an investment either. Jim simply wanted to share with Mrs. Smith
a prediction that the price of so-and-so a commodity was about to go down.
"Our forecasts will help you decide whether ours is the kind of firm
you might someday want to invest with," he added. As predicted, the
price of the commodity subsequently declined.
By the time Mrs. Smith received
a third call, she was a believer. She not only wanted to invest but insisted
on it--with a big enough investment to make up for the opportunities she
had already missed out on. What Mrs. Smith had no way of knowing was that
Jim had begun with a calling list of 200 persons. In the first call, he
told 100 that the price of so-and-so a commodity would go up and the other
100 were told it would go down. When it went up, he made a second call
to the 100 who had been given the "correct forecast." Of these,
50 were told the next price move would be up and 50 were told it would
The end result: Once the predicted
price decline occurred, Jim had a list of 50 persons eager to invest.
After all, how could they go wrong with someone so obviously infallible
in forecasting prices?
But go wrong they did, the
moment they decided to send Jim a half million dollars from their collective
All That Glitters
Not only did the two brothers
have a fancy office building with their own company name on it, but the
investment offer seemed sound and straightforward: "Instead of buying
gold outright and holding it for appreciation, make a small down payment
that the firm could use to secure financing that would permit much larger
quantities of gold to be bought and held for the investor's accounts."
That way, when the price of gold rose--as was "sure to happen"--investors
stood to realize highly leveraged profits.
The company provided storage
vaults where investors could view the wall-to-wall stacks of glittering
bullion. By the time authorities caught wind of the scheme's suspicious
smell and looked for themselves, it turned out the only thing gold was
the color of the paint on the cardboard used to construct look-alike bars
The counterfeit gold, however,
proved far easier to find than the millions of dollars of investors' money.
Most of that is still missing.
16 Questions That
Can Turn Off an Investment Swindler
The first line of defense against
investment fraud is your inalienable right to ask questions and--until
you get the right answers--to say "No." And mean no.
Not surprisingly, this is usually an investment swindler's first point
of attack. To keep you from asking questions, he asks
them! Invariably, the questions have "yes" answers, such as
"You would at least be interested in hearing about such a fantastic
investment opportunity, wouldn't you?" or, "You would like to
make a large amount of money in a short period of time with little or
no risk, right?"
One difference between a reputable
investment firm and a swindler is that reputable firms encourage you to ask questions, to obtain as much information as possible, to clearly
understand the risks involved, and to be entirely comfortable with any
investment decision you make. The only thing a swindler wants is your
money. These are some of the questions that swindlers don't like to hear:
1. Where did you get my
If the response is that you
were chosen from a "select list of intelligent and prudent investors,"
that select list may be the telephone directory, or a purchased list of
persons who've bought certain types of books, subscribed to particular
magazines, or responded to newspaper ads. If you have made ill advised
investments in the past, you can be pretty sure your name is on someone's
alumni list. It's the list swindlers prize most: Easy preys who are eager
to recoup (but are doomed to repeat) their earlier losses.
2. What risks are involved
in the proposed investment?
Except for obligations of the
U.S. Treasury, which are considered risk-free, all investments involve
some degree of risk. And some investments, by their nature, involve greater
risks than others. Keep in mind that if the salesman had knowledge of
a sure thing, big-profit investment opportunity, he wouldn't be on the
phone talking with you.
3. Can you send me a written
explanation of your investment so I can consider it at my leisure?
For someone peddling fraudulent
investments, that can be a double turnoff. For one thing, most
crooks are reluctant to put anything in writing that might cause them
to run afoul of postal authorities or provide material that, at some point,
might become evidence in a fraud trial. Secondly, swindlers don't want
you to do anything at your leisure. They want your money now.
Accordingly, it's a good rule
of thumb that any investment which "absolutely has to be made immediately"
shouldn't be made at all. You may not always be right, but you are less
likely to be sorry.
4. Would you mind explaining
your investment proposal to some third party, such as my attorney, accountant,
investment advisor or banker?
If the answer goes something
along the lines of "normally, I'd be glad to, but there isn't time
for that," or if the salesman snaps back by asking "can't you
make your own investment decisions," these are virtually certain
clues that your final answer should be an emphatic "No."
5. Can you give me the
names of your firm's principals and officers?
Although some persons who establish
and operate dishonest firms change their own names as often as they change
their firms' names, even the hint that you are the kind of investor who
checks into things like that can be a fast turn-off for a swindler.
6. Can you provide references?
Not just another list of investors
who supposedly became fabulously wealthy (the names you get may be the
salesman's boss or someone sitting at the next phone), but reputable and
reliable recommendations such as a bank or well-known brokerage firm that
you can easily contact.
7. Do you have any documents
such as a prospectus or risk disclosure statement that you can provide?
This may not be available in
connection with all types of investments but in many investment areas--such
as securities, futures and options trading--it's required. And there can
be requirements that you be provided with this information and acknowledge
in writing that you have read and understood it. Obviously, it's not the
sort of information a swindler is likely to distribute.
8. Are the investments
you are offering traded on a regulated exchange, such as a securities
or futures exchange?
Some bona fide investments
are and some aren't, but fraudulent investments never are. Exchanges
have strict rules designed to assure fair dealing and competitive price
determination. There are also in-place mechanisms to provide for rule
enforcement and to impose severe sanctions against those who fail to observe
9. What governmental or
industry regulatory supervision is your firm subject to?
If the salesman rattles off
a list that ranges from the FBI to the Boy Scouts, tell him you'd like
to check the firm's good standing before making an important investment
decision. Then verify the response. Few things discourage a swindler faster
than the thought that his first visitor the next morning may be from a
If, on the other hand, you
are told his particular area of investment isn't subject to regulation
(perhaps because everyone in his business is an ethical, upstanding
citizen), take that explanation for whatever you think it's worth. At
the very least, keep in mind that any ongoing supervision which isn't
being provided by a regulatory organization or agency will have to be
provided by you.
10. How long has your
company been in business?
In any kind of business activity,
there can be advantages to dealing with a known, established company.
This isn't to say that new businesses aren't starting up all the time
or that the vast majority aren't perfectly reputable. But if you find
yourself talking with someone who doesn't seem to have a past, it can
be worthwhile to find out why. Many swindlers have been running scams
for years but understandably aren't anxious to talk about it.
11. What has your track
Before you accept a salesman's
assurance that he can make money for you, you have the right to know what
his performance has been in making money for others. And ask to have the
information (if there is any) in writing. Boasting over the phone is one
thing; putting it down on paper is quite another. In any case, even if
you are able to obtain a documented performance record, don't lose sight
of the fact that past performance in itself provides no assurance of future
12. When and where can
I meet with you or with another representative of your firm?
Chances are a crooked operator--particularly
if he is operating out of a telephone boiler-room--isn't going to take
the time to visit with you and even more certainly doesn't want you to
see his place of business.
13. Where, exactly will
my money be? And what type of regular accounting statements do you provide?
In many investment areas, such
as futures trading, firms are required to maintain their customers' funds
in segregated accounts at all times. Any mingling of investors' funds
with those of the firm or its principals is prohibited. You might also
want to find out what, if any, routine outside audits the firm's account
records are subject to.
14. How much of my money
would go for commissions, management fees and the like?
And ask whether there will
be other costs such as interest or storage charges, or whether the investment
agreement involves any type of profit sharing arrangement in which the
firms' principals participate. Insist on specific answers, not glib and
evasive responses such as "That's not important" or "What's
really important is how much money you are going to make." And, again, get it in writing, just as you would any other type of
15. How can I liquidate
(i.e. sell the item I'd be investing in) if and when I decide I want my
If you find that the investment
is illiquid, or there would be substantial costs if liquidated, or that
you are unable to get straight and solid answers, these are all things
to consider in deciding whether you want to invest.
16. If disputes should
arise, how can they be resolved?
Short of having to go to court
to sue someone, does the company or regulatory organization provide a
mechanism for resolving disputes equitably and inexpensively through arbitration,
mediation, or a reparations procedure? Aside from seeking important information,
you may be able to detect whether the salesperson is uncomfortable or
impatient with this line of questioning. Swindlers generally will be.
Before You Invest
Asking some or even all of
the questions just suggested isn't likely to produce straight answers
from a crooked investment promoter but, as indicated, the very fact that
you are asking such questions can be a turn-off. Bear in mind, however,
that no matter how persistently or skillfully you pose the questions,
experienced con men are at least equally skilled in evading them, in providing
downright dishonest answers, and refocusing the conversation on your "tremendous
Bear in mind also that, while
separating you from your money is the swindler's primary goal, the very last thing he wants you to do is check him out. That could cause
you not to invest or, worse still, alert regulators that someone they
know well has set up shop in a new area or is running a new scam.
For this reason, most con men
deliberately make themselves difficult to investigate: By tailoring
their schemes to operate in regulatory cracks where federal or national
regulatory organizations may lack clear-cut jurisdiction; by operation
in states or communities where authorities are known to be short-staffed
or occupied with more pressing criminal activities; by changing their
names or modus operandi, by stressing the urgency of the investment
so you won't have time to investigate; and by targeting victims who may
not know how or where to check them out.
Moreover, as described in swindle
scenarios earlier in this document, con men have numerous and ingenious
ways of seeking to convince you there is no need to investigate.
For example, your friends, neighbors or business associates invested and they made money, right? That, of course, is why ever-popular
Ponzi schemes (named after the first person to perfect the referral technique)
are so prevalent--and why you should never make investments based on tips,
no matter how trustworthy the source.
While there is no way to know
for certain whether a particular investment will make money or lose money,
there is one thing you can be certain of: Any money you hand
over to an investment swindler is lost the moment you part with it. The
question is, how do you check out someone who is offering what sounds
like an irresistible investment offer? Here are some of the ways:
-Find out whether the
local police department or Better Business Bureau has complaints on file.
If so, you can make your investment
decision accordingly. But be aware that the absence of local complaints
doesn't necessarily mean a firm or individual is on the up-and-up. It
may simply mean that investors haven't yet become aware that they've been
bilked. Or it may mean you will have the distinction of becoming the first
victim in town. It could also mean that other victims have been too embarrassed
to report their losses. Regrettably, that's not uncommon.
-Make a phone call to
the financial editor of your local newspaper.
Although newspapers don't give
endorsements or make investment recommendations, they may be aware of
a swindler who is working a scam in the area--and may even have published
a warning article that you happened to miss. Then too, if readers are
being pitched with suspicious-sounding investment offers, that's something
an investigative reporter might want to look into.
-If the investment offer
isn't local, don't be reluctant to make a long distance phone call or
It could be that the police,
Better Business Bureau or newspaper in the community where the offer is
coming from will be able to provide information. Again, however, even
the absence of such complaints doesn't necessarily mean the firm is legitimate.
Some swindlers--particularly telephone boiler-room operators--try to maintain
a low profile in their local areas. That lessens the likelihood of their
coming to the attention of local authorities; it prevents prospects from
dropping by to see their operations; and it makes it more difficult for
out-of-towners to discover what they are up to.
-Check to see if your
city or state has a consumer protection agency.
Many do. If so, there may be
information there about the person or firm that's offering the investment
you are interested in. In any case, the agency should be able to provide
names, addresses and phone numbers of other places you can check.
The majority of individuals
and companies offering investments to the public are subject to some sort
of regulation--and may be subject to multiple regulation. Those which
trade in futures contracts and options on futures contracts are regulated
by the Commodity Futures Trading Commission, a federal agency, and by
National Futures Association, an industry wide self-regulatory organization
authorized by Congress. In the securities and securities options business,
the federal regulatory agency is the Securities and Exchange Commission.
There is also an industry self-regulatory organization, the National Association
of Securities Dealers.
The Federal Trade Commission
has jurisdiction over advertising, franchises and business opportunities.
Deals involving interstate promotion of land sales are regulated by the
federal Department of Housing and Urban Development.
By contacting the appropriate
regulatory organization, you can generally find out whether the firm or
person is properly registered to engage in that type of business and whether
any public disciplinary actions have been taken against them.
-Write or phone law enforcement
Whether or not a person or
firm is subject to the scrutiny of a regulatory organization, the fact
is that fraud is against the law in every state of the nation.
And if it involves interstate commerce--including the use of the mails
or phone lines--federal criminal statutes apply. If an investment sounds
suspicious, check with the appropriate agency. They may be able to furnish
information or conduct an investigation of their own. The following are
some you could contact:
The office of the local public
prosecutor, the state attorney general, and the state securities administrator.
Someone in the local courthouse should be able to give you names, addresses
and phone numbers.
If the mails are used in promoting
or operating a phony investment scheme, the federal Postal Inspector wants
to know about it. The postmaster in your community can put you in touch
with them. Fraud involving any form of interstate commerce is also of
interest to the Federal Bureau of Investigation. The nearest office should
be listed in your phone directory.
Sure it can take some time,
effort and possibly expense to thoroughly check out an investment proposal,
but if you have any doubt if it's worth the trouble, talk with people
who didn't and wish they had!
Finally, Don't Lose
Touch with Your Money
The need to exercise good financial
sense doesn't stop once you've decided to invest. It's possible, all your
precautions not withstanding, that you may have turned your money over
to a swindler. It's also possible that what didn't start out to be a swindle
may turn into one if the promoter finds himself in financial trouble or
with too many poor investments on his hands. That can lead to cover-up
bookkeeping or, worse yet, a decision by the promoter to take flight with
what's left of his customers' money.
It's important to continuously
monitor your investments and to be alert for any telltale signs that things
aren't quite the way they should be. The person who sold you the investment,
for example, may suddenly become inaccessible--continuously tied up on
the telephone or unwilling to return your calls, busy with clients or
out-of-town on important business matters. Or various documents or accounting
statements you were promised don't arrive. Or information you do receive
is vague or at variance from what you had been led to expect. Or money
that was supposed to have been paid to you isn't received, and instead
of checks you get excuses.
If you become suspicious or
overly uncomfortable with an investment you've made--and if you are unable
to totally resolve your concerns--the best thing you can do is try to
get out of it. And do so as quickly as possible. That means demanding
your money back, accompanied, if necessary, by threats to contact authorities.
You might or might not get it. The best you can hope for, if indeed there's
fraud involved, is that the swindler may decide to refund your money rather
than risk having you blow the whistle while he is still on the prowl for
new investors. If that happens, consider yourself more fortunate than
Be aware, if you do decide
to try and get a refund, that the person who was smooth-talking enough
to get your money in the first place will unleash all his skills to persuade
you to leave it with him. No doubt, he will have some answer
for all of your concerns. And some explanation for all apparent irregularities.
And, no doubt you will be told that backing out now would be anything
from contractually illegal to a terrible financial mistake. Swindlers
figure that every once in a while some of their more fidgety investors
simply have to be reconvinced. He may tell you that you are so close to making really big money, or the investment now looks even more profitable
than originally expected.
Believe him at your own peril.
If you do insist on a refund
of your investment, insist on it immediately. Ask to pick it up yourself,
or offer to pay the cost of having it sent by overnight mail or wired
directly to your bank. Don't settle for "it will take a week or two"
or "the check is in the mail." As everyone knows, checks seem
to be lost more often than any other type of mail!
If you don't get your investment
back (and chances are you won't), or even if you do and still suspect
a swindle, report it promptly to the appropriate authorities and regulatory
officials. They may be able to conduct an investigation and, if called
for, seek legal action to impound whatever funds the firm still has.
Bottom line, the unfortunate
reality is that very few victims of investment fraud ever again see a
cent of their money. It's also a reality that the business of swindling
will continue to flourish as long as unwary investors provide prey for
unscrupulous promoters. Hopefully, the information in this document--if
heeded--will help to assure that a swindler's next fortune won't be made
at the expense of your misfortune.
* Courtesy of The National