Investment scams aren’t something new; unfortunately they have been around for hundreds of years. What is new is the way that scammers try to get to you with more complex offerings. Be aware of these common scams:
Private Event with ‘Free Lunch’- These are an invitation only event, where you are invited to find out about an exclusive investment only offered to those in attendance. Generally these are offered as a “get rich quick” opportunity while being fed a meal, and target retirement age investors. Many times the invitation is from someone you don’t even know.
Unregistered Investments- Just because the investment sounds good and the documents look real, doesn’t mean that they have been approved for sale to the public through regulatory agencies (ex. Securities Exchange Commission). These are typically sold through someone who isn’t a state registered representative of any state registered firm. If you have any question on the investment representative or firm, contact your state insurance department.
Investing in Precious Metals and Mines- The mining company or metals that you own may not exist. Scammers know you may never visit the mine you supposedly own because they are located outside of the United States.
Ponzi Schemes- This is the number one type of scam, which can go on for decades if no one needs distributions that are larger than the amount of money the scammer has. Unfortunately these usually involve friends and family, since the investor unknowingly pulls them in through introduction to the scammer.
Loans, Private Bank Scams, or Private Placements- These are investments that seem like they are part of a private bank and reserved only for the ‘wealthy’ to participate in. Often, there is no real bank that is registered with the state and monitored by banking regulatory agencies. These investments are presented to you as an opportunity of being ‘lucky to participate’, and promise excessive returns that sound real because of their exclusivity.