We recently posted in this space about the surge in investment scams like Ponzi schemes and affinity fraud during the COVID-19 era. How can you protect yourself during the current coronavirus-related schemes and beyond?
Recent insurance scam
For example, a Florida insurance agent and former lawyer who called himself the “Annuity King” was recently indicted for fraud in a Ponzi scheme he marketed as an investment in a new insurance business, according to The Herald-Tribune (Sarasota). He targeted senior citizens, advising them to drain their investment accounts and borrow money against life insurance to invest in his new “business.”
The investors faced unexpected fees for liquidating their accounts. Instead of paying promised returns, the fraudster spent the money on an excessive, luxurious lifestyle and to pay investors farther down in the Ponzi arrangement.
How can you uncover fraud or other unethical or unlawful behavior in investment advice?
Some red flags may provide hints that something is not right in your or a loved one’s investment portfolio. Think about whether any of these factors apply to your investment experiences and keep them in mind for future investment options:
- The person who sold to you or referred you to an investment is not properly licensed or registered to do so.
- The seller made promises too good to be true concerning risks and returns.
- The advisor was a stranger who infiltrated a group of which you are a part like a religious or cultural group to gain people’s trust.
- You were charged unexpected fees.
- The advisor received a commission for the sale to you without having disclosed their conflict of interest in selling the product.
- The advisor sold your investment without first waiting at least a year first.
- The advisor frequently moves your money around to different stocks and other investments like a shell game, a practice called churning or overtrading that may illegally result in multiple commissions.
- You incurred unplanned tax liabilities.
- You are not getting the level of return on investment you were told you would.
- You notice unusual transactions or charges on your statements that you did not expect or authorize.
- You felt pressured to decide on the spot instead of taking time to consider and research the investment.
- And others
An experienced securities attorney can provide advice and investigate a suspicious investment. If fraud or other unlawful activity was involved, legal counsel can advise you about potential legal remedies.