Investor Alert: Advance Fee Fraud

By Geoff Hafer, Spring 2017 Student Intern

The SEC receives thousands of complaints every year describing a scam known as “advance fee fraud.”  An investor will be asked to pay a fee up front before receiving any proceeds, money, stock or warrants.  This up-front fee is often described as a deposit, underwriting fee, processing fee, administrative fee, commission, regulatory fee or tax, or sometimes an incidental expense that will be paid back later.  Unfortunately, in cases of advance fee fraud, once they have your money you can bet you will never hear from them again.

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Pension Plan Scam, Beware!

By Becky Clapes, Guest Blogger

Recently, the North American Securities Administrators Association released a warning to retirees about bogus pension investments. The scam operates when investors give funds for cash advances and pension holders turn over future payments for an immediate lump sum cash payment. Continue reading

Beware of EB-5 Fraud

By Becky Clapes, Guest Blogger

The EB-5 program allows non-citizens to invest $1 million in a commercial enterprise that creates a minimum of 10 new full-time jobs within two years or saves 10 pre-existing jobs that were at risk in a troubled business. Once the two years has passed, the investor may then apply to become a legal permanent resident and then eventually, apply for citizenship.

While the EB-5 program has created many new businesses and the revival of troubled businesses, it has also been stricken with scam artists. The most common types of scams involve scam artists preying on investors to put their money into illegitimate businesses or fake regional centers. Continue reading

Lights, Camera, Fraud: Movie Producer Allegedly Defrauds Investors

By Becky Clapes, guest blogger

On November 9, the Securities and Exchange Commission charged a movie producer with defrauding investors via hedge funds, stealing money to live a lavish life. Throughout 2011 and 2012, the SEC alleges that David Bergstein stole millions of dollars from investors, using the stolen funds to buy himself watches, guns, jewelry, and more. Bergstein’s scheme allegedly involved having investors put money into hedge funds, which he would proceed to transfer into unregistered hedge funds and then into his own pocket. In two transactions alone, Bergstein allegedly stole $2.3 million and $3.5 million. The SEC has charged Bergstein with violating the Securities Exchange Act and Rules and various aiding and abetting violations.

Phantom [Accounts] of the Opera

By Becky Clapes, Guest Blogger

Unfortunately, it is possible for scam artists to open bank accounts and credit card accounts in your name. According to Alert Investor one of the more common forms of financial fraud is when a scam artist steals your information and opens credit card and bank accounts in your name. Below are several ways to monitor your accounts to both avoid this happening to you as well as where to report fraud if you see it on your account.

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Online Safety: Planning for Diminished Capacity

By Becky Clapes, Guest Blogger

The SEC’s Office of Investor Education and Advocacy and the Consumer Financial Protection Bureau’s Office for Older Americans recently released their number one piece of advice on preparing for your financial future. “Hope for the best, but plan for the worst.”

As a person’s capacity declines, so does his or her ability to mange money and financial assets. This “diminished capacity” makes individuals more susceptible to financial abuse and fraud.

Here are a few things you can do to protect yourself from financial abuse and fraud in preparation for the potential of diminished capacity.

  1. File and organize your financial documents. Keep them safe and organized and give copies to trusted friends or family.
  2. Keep a list of passwords, PINs, safe-deposit boxes, keys, and other important financial information.
  3. Have an emergency contact for your financial advisers. In case of an emergency, your financial advisers can contact this person if unable to contact you.
  4. Consider having a durable financial power of attorney. This person would have the legal power to make financial decisions for you if you become incapacitated.
  5. Keep all of your financial and personal information as up to date as possible.
  6. If something seems amiss, speak up!

For more information about planning for incapacity, follow this link.

Protecting Senior Investors: Regulatory Cooperation After Reports

By Michael Williford, Fall 2016 Student Intern

Over the course of the week, I’ve addressed four of the five major recommendations of NASAA’s practices and policies guide for combatting senior financial exploitation. In order to effectively take on financial scammers bent on exploiting seniors, NASAA’s final, and perhaps most important, recommendation to financial services firms includes a larger policy recommendation directed at communication between stakeholders in the financial services and regulatory enforcement agencies.

Because financial exploitation cuts across financial, law enforcement, and legal subject areas, cooperation between private sector financial services firms, the larger security industry regulatory authorities, and state law enforcement agencies is critical. Part of any cooperative scheme to reduce financial exploitation of seniors, according to NASAA, must include the sharing of information between private securities firms, adult protective services agencies (APS), and law enforcement.

Specifically, NASAA recommends that private firms, the entities best positioned to spot the red flags associated with financial exploitation, share access to financial records with state agencies so that perpetrators of this kind of fraud can be stopped. Frequently, NASAA says, private firms make the initial report to state agencies, but are not forthcoming when the state makes follow up requests for documents that are required to put together the case necessary to punish the bad actors. Because of the urgent nature of financial exploitation, clear channels of communication are necessary to effectively addressing exploitation in time to prevent the damage done to senior citizens when no one is looking out for their interests. To learn more about NASAA, its mission, and who to contact if you think a senior citizen may have been the victim of financial exploitation, visit To view the full report, click here.