The AARP has issued a fraud protection bulletin warning investors how to avoid becoming the victim of whoever happens to be peddling the next Ponzi scheme. Unfortunately, older investors are among the favorite prey of financial fraudsters. According Investor Protection Trusts CEO Don Blandin, one in five people in the 65 and over age group have already been exploited. Millions more are at risk.
To help investors, AARP has put out a description of five red flags warning of a possible financial scam:
1) The broker-adviser tells you that you wouldn’t be able to access your money during a “lock-up” period.
2) You feel pressure to invest now due to limited space or for some other reason. Give yourself time to do your own due diligence, make sure that the investment is legitimate, or seek the advice of others.
3) Sales pitches with a news hook. The North American Securities Administrators Association reports that in the last year alone, the leading financial frauds involved precious metal investments and distressed real estate, both involved topics that made headlines.
4) Investors that are being targeted belong to a group whose members may be possibly cognitively impaired, including elderly seniors that live alone (in particular, women).
5) Questionable marketing tactics, such as direct mail, telemarketing, and affinity pitches.
In the AARP’s bulletin, Louis Straney, a securities fraud expert who wrote the Investor’s Guide to Loss Recovery, says that it always a good idea to talk to a third party when considering an investment proposal. He also warns that just because the party making the proposal has a fancy office doesn’t mean that the investment is a legitimate one. He also recommends inquiring about an investment adviser’s qualifications and background.
According to a Special Report from InvestorProtection.org, financial abuse fraud is the 21st century crime. Sometimes the victims are part of a fraud scam targeting multiple seniors. On other occasions, incidents of financial abuse involve one particular target. One need only look at the case of socialite Brooke Astor. While she suffered from Alzheimer’s her son sought to steal her $187 million fortune. That said, one doesn’t have to be as rich as Astor to be targeted. Elderly seniors are defrauded of almost $3 billion a year and this doesn’t include the cases that go unreported.
Throughout the US, our stockbroker fraud lawyers represent elderly investors that have lost money because of broker or investment adviser misconduct. For many elderly people, the loss of their investments is the depletion of their live savings and the end to the security they sought to provide for themselves. Financial fraud of the elderly is a crime and it is also elder abuse.
More Blog Posts:
Two Texas Men Sentenced For $100 Million Life Settlement Scam that Bilked Over 800 Investors, Stockbroker Fraud Blog, October 4, 2011
Elder Investors Suffering From Alzheimer’s Make Perfect Targets for Securities Fraud, Stockbroker Fraud Blog, September 8, 2011
Wedbush Securities Ordered by FINRA to Pay $2.8M in Senior Financial Fraud Case Over Variable Annuities, Stockbroker Fraud Blog, August 31, 2011
SEC Issues Emergency Order to Stop $26M “Green” Ponzi Scam, Institutional Investors Securities Blog, October 13, 2011