Ease
Up but Still Enjoy Gardening as You Age
The Fierce Dedication of a
55-Year-Old Cyclist Commuter
Atria El Camino Gardens Resident Celebrates 100th Birthday
Even Light Exercise Decreases Chance of Illness, Death
Medigap Changes Take Effect — Premiums Expected to Climb
Senior Health: Medication Errors Can be Deadly
Women of a Certain Age: Honey, Why Is There Caution Tape Around the TV?
Ken's Corner: What Happened to the Lady With Two Cocker Spaniels?
Senior Investment Savvy No Guarantee in Preventing Fraud
By
Stephen J. Baetge
Staff Writer
Each
year, seniors are losing millions of dollars through various
types of financial fraud. Many of these victims possess
the mistaken perception that they are intelligent enough
and cautious enough to avoid becoming yet another victim of a
cunning “money
grabbing” scheme.
“Fraud is the skin of the truth stuffed with a lie. This is why it is hard
for the elderly and other investors to identify it,” said Barry Minkow
in a recent statement to the United States Committee on Senate Special Aging.
“Successful education to the elderly in the area of financial fraud prevention
must equip people to peel away the mask and look underneath.”
Having spent over seven years in prison for fraud, Minkow should know.
According to the California Department of Corporations, senior investment fraud
schemes have ranked on the top of the “California Top Financial Scams” list
for the past four years. Many of these scams attract retirement money or qualified
money, entice investors with offshore opportunities to stay out of the reach
and jurisdiction of law enforcement and often utilize unregistered securities.
These frauds often are difficult for the intended victims to recognize because
they are clothed in legitimate appearance, are often outside the jurisdiction
of regulatory agencies and can involve investment opportunities which are outside
the familiarity of even the most sophisticated investors.
Scams involving retirement money often do not set off red flags for investors
because there are no immediately paid returns that require actual monetary accountability.
Retirement investments usually only require that the criminal provide the victims
with monthly statements rather than cash.
Often, elderly investors are enticed into placing money into such accounts by
being told that they may outlive their existing retirement. In addition, the
criminal gains authenticity by claiming IRS or other legal approval of the investment.
Another investment fraud trend that catches many seniors unaware is offshore
investment schemes. These are usually peddled through the Internet or by way
of television, magazine or newspaper advertising.
Because they are done offshore, the “investments” avoid the scrutiny
of federal or state regulatory agencies. These investments often take advantage
of fear or distrust of the legal system and promise asset protection because
they are outside the reach of the court system and tax agencies. In some cases,
the scam artists have gone so far as to actually create fictitious countries
in order to perpetrate their scam.
Unregistered securities are often a preferred method of obtaining money from
even the wariest of investors. The elderly and the average American investor
do not know the definition of a security, and because of that, they are not able
to recognize an unregistered security.
Most people assume a security is a stock or bond. In reality, an investment is
a security whenever money is taken with the promise of certain returns. The specific
instrumentality of the investment does not make it “not a security.” Scam
artists use unregistered securities to lure investors into areas in which they
have little familiarity in order to create an easier rip-off.
Given the almost impossibility of even the most adroit investor to determine
the legitimacy of an offered investment through self help, many programs have
been set up to help investors identify fraudulent schemes.
The Seniors Against Investment Fraud (SAIF) program established by the California
Department of Corporations is one such program, and it has operated with marked
success since its establishment. The primary purpose of SAIF is to alert and
educate Californians over the age of 50 about investment and telemarketing fraud
crimes and how to avoid being victimized by scam artists.
SAIF and other similar governmental programs have been very successful. In one
90-day period during the years 2008-2009, SAIF successfully saved seniors more
than $12 million, based upon 21 telephone calls by seniors who were concerned
with the legitimacy of the proposed investments.
SAIF found that the agents and companies making the offers were not licensed
or used deceptive sales practices. During the same years, SAIF saved 28 seniors
over $10.5 million by tracking monies which were going to be or had already been
invested.
In one SAIF case, three elderly investors were suspicious about an investment
they had already made and wanted to cancel their investment contract. The individual
investors were not aware that their money had been placed in an annuity.
SAIF immediately investigated the matters, and informed the investors that the
law allowed them to rescind any annuity transaction during a 30-day period and
assisted the investors in unwinding their annuity transactions. The three investors
were saved from a loss of almost $1 million.
SAIF maintains a client resource center which may be contacted at (866) 275-2677
or online at www.corp.ca.gov/
outreach/saif/saif.htm.
The Department of Corporations is California’s investment and financing
authority and is responsible for the regulation, enforcement and licensing of
securities, franchises, off-exchange commodities, investment and financial services,
independent escrows, consumer and commercial finance lending, residential mortgage
lending and payday lenders.
Contact the toll-free consumer resource center at 1-866-ASK-CORP (275-2677) for
information or to obtain a consumer complaint form. Before agreeing to a financial
agreement you have some concerns about, visit Corporations’ Web site at
www.corp.ca.gov.
This page and its contents ©2010
Metropolitan News Company, Inc.
