Like “Swimming With Sharks”: Local Investors Fall For Another Alleged Billion-Dollar Ponzi Scheme

Life in South Florida can often seem like swimming with sharks. Read how conservative local investors may have been victimized in yet another billion-dollar Ponzi scheme.

Just when you thought it was safe to go back in the water.

Imagine you’re a conservative investor looking for “safe, secure returns.” What could be better than “low-risk investments with a high yield?”

Or maybe you’re trying to educate yourself about money so you can enjoy a secure retirement and stay far, far away from slick, shifty money salesmen. Signing up for an “educational” class focusing on preparing for retirement seems like a safe option, right? Heck, it’s taught at a local university. What could be more reassuring than that?

Think again. You had better read this Palm Beach Post story about how South Florida investors were taken for a ride by a local couple peddling over $50 million in allegedly phony short-term mortgage notes right here in Boca Raton.

The SEC has filed suit, claiming it’s all part of a “massive Ponzi scheme raising more than $1.22 billion from over 8,400 investors nationwide.”

The scam was also the subject of a May 7 Wall Street Journal story you can read here.

Every day, scammers in South Florida – and elsewhere – are trying to separate you from your cash.

Your best defense? Educate yourself by learning from the Palm Beach Post and Wall Street Journal articles how these scammers operate, and heed these financial self-defense guidelines:

• Every “educational” class taught is trying to get your business and sell you stuff, not educate you. That’s not illegal, but proceed with extreme caution. That respectable university setting was carefully chosen to hide a questionable and potentially illegal operation.

• Before you invest or take advice from anyone, make sure they are properly licensed and registered. The Palm Beach Post exposed how one of the class “teachers” had already been permanently barred from the securities industry and had no place in the classroom. Neither “teacher” was registered to sell securities or provide investment advice, yet they held themselves out as “experts” doing exactly that.

• Think long and hard before investing in private, unregistered securities that don’t trade on a national exchange. The brokers who sell these “private placements” are far more likely than other brokers to have sketchy records, a Wall Street Journal analysis has found“It’s one of the most abused areas of finance today,” reports another attorney involved in the case. Want to know if you’re getting the straight story? Ask the broker to verify in writing how much they’re getting paid to make the sale.

• If you hear the words “safe,” “low risk” and “high return” in the same sentence, run far, far away. You are looking at a F-R-A-U-D. “You can’t ever have a low-risk high-return investment,” said one of the attorneys involved in the case. You earn potentially higher returns by taking on higher risk.  Period.

• If in doubt, get an expert second opinion before you invest. Stick with fee-only advisors who are not compensated by commissions or referral fees. They are fiduciaries and are well positioned to give you objective, conflict-free advice in your best interest, not a cheesy run-around.

About Mari Adam

Mari Adam, Certified Financial Planner™ has been helping individuals and families chart their financial futures for over twenty-five years. Have a question about your financial situation? Ask Mari!

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