Investment Fraud: How to protect yourself from Ponzi Scams?

Today, I’m going to continue with some warning signs of investment fraud and Ponzi scams.

Only invest in products that are registered with the SEC or state regulators. Ponzi scams are usually unregistered investments. If the product is registered it gives the stockbroker more legitimacy since you can research the company’s management, products, services and finances.

Check the broker and the company’s licensing. Stockbrokers and their firms are required by both state and federal law to be licensed. Often, but not always, Ponzi scams are run by the unlicensed.

Avoid investments you don’t understand or you can’t get absolute full information on. Ponzi scam artists are betting that, if they make the information confusing but sound plausible, you won’t put 2 and 2 together. Don’t worry, if someone acts like you are a moron because you don’t understand their strategy and keep asking questions, then they are probably purposely trying to confuse you in order to prepare you for extraction.

If you can’t get it in writing, it’s a bold faced lie. That’s true in all aspects of business. If they don’t want it written down for the SEC, the courts and posterity, there is a reason for that! Do not accept excuses about why you can’t review information about an investment in writing. Just flee to a more stable broker before there is nothing left to extract. Also, while everyone makes mistakes once in a while, there is usually an entire staff or two reviewing the numbers before they are published in writing. Account statement errors can be a sign that your money is not actually going where your stockbroker says your money is going, and he is not keeping up with the scam. In the very least, accounting errors prove that the company does not have a reliable tracking system for cash flow, which is just as dangerous as a Ponzi scam!

If you try to cash out your investment and they try to offer you a product with an even higher yield, or you don’t receive a payment, beware! Ponzi scams can only run as long as they have money in the till from new investors, or as long as they keep money in the till by rolling over old investors. If a small percentage of those involved cash out, there is no more money, and the rest of the investors receive no funds and report the investment fraud.

As always, if you are considering making an investment, or have already made an investment and feel you need the advice of a skilled fraud lawyer, do not wait! Call the best Tampa lawyer with the experience necessary to give you the help you need. Call S. David Anton of Anton Legal Group!

S. David Anton is a member of Public Investors Arbitration Bar Association (PIABA) the preeminent national wide organization of attorneys who represent brokerage firm customers in disputes with the industry.  He is also a Certified Securities Arbitrator with the Financial Industry Regulatory Authority (FINRA), formerly NASD and resolves disputes between investors and stockbrokers, investment advisers and their firms. He has been practicing law since 1985 and representing brokerage firm customers since 1999.  He is a Tampa, Florida based attorney who can handle securities arbitration anywhere in the U.S.