Those clever phishermen have a new strategy

We've all been warned about the dangers of clicking on links in emails purporting to be from a bank, the IRS or some other government agency. The latest fraudulent email I received capitalizes on those warnings. It says:

ADVISORY: Some members and non-members of Franklin Bank have received fraudulent emails. This email was NOT issued by Franklin Bank, and should be deleted. Do not follow the instructions in the email. Do not click the link. For security reasons we have deactivated your debit card. Please contact us at (800) xxx-xxxx to activate your debit card. (I have x-ed out the phone number)

The email features the logo of a real Franklin Bank to make it look official. The email address is almost like that of the real Franklin Bank. But of course the phone number is the fraudsters' number, not the bank's number. If you call and give out your debit card information, your bank account most likely will be emptied in a matter of minutes.

So if you get an email purporting to be from your bank, don't click and don't call the number in the email. Instead, call the number that's on your statement or that you've looked up yourself.

 

Tackling investment fraud against seniors; cracking down on equity-index annuities

Regulators and politicians seem to be paying a lot more attention these days to the problem of investment fraud involving seniors.

Should federal securities law have higher penalties when the those who violate the law prey on older people? That's what U.S. Sens. Herb Kohl and Bob Casey think. Here's a press release about their bill, which would add $50,000 to civil fines when securities law violations involve someone 62 or older. Of course, there has to actually be a federal investigation for that to apply and the perpetrator has to have some money to pay the fine.

The SEC also is looking more closely at one one of the biggest problems: the sale of equity-index annuities. The commission has proposed this rule, which would classify many of these annuities as securities, subject to securities regulation. These annuities are highly complex products with lengthy surrender penalties and are a subject of frequent investor complaints.

Kohl also is concerned about the use of misleading designations that create the appearance of adviser competency even though they involve very little work. He previously introduced the Senior Investor Protection Act (S2794), which involves grants to states to reduce fraudulent and misleading investment marketing to seniors.

Worried about identity theft? Read what one reporter did in a data breach

Fellow Gator grad Leslie McFadden was among more than 11,300 University of Florida students (current and former) to have their personal information posted online for several years without password protection. The security breach was recently discovered, although there is no evidence anyone took advantage of it.

McFadden, who writes for Bankrate.com, decided to take steps to protect her credit just in case any thieves might have used the unprotected information (including her Social Security number) to steal her identity. Here she describes what happened and what she did. It makes very interesting reading. I would not have taken the drastic step of freezing my credit without some evidence that someone was using or trying to use my credit. However, anyone who has been the victim of a data breach should become more dilligent about regularly checking his or her credit reports. They're available from each of the three major credit bureaus once a year. You can check one every four months on a rotating basis.

He's got a great business plan....or at least that's what investors thought

Rodney James is cooling his heels in the Lee County Jail and investors are once again kicking themselves for trusting a smooth-talking entrepreneur. He was charged last week with grand theft, fraud, money laundering and sale of unregistered securities in connection with nearly $2-million in investments. James talked up a grand plan for opening a chain of restaurants in Arizona, Missouri and Florida. He solicited money and gave investors stock certificates or promissory notes. A few restaurants were actually opened, but are now closed, but land was never bought or leased for most of them. Instead, the sheriff's department says James spent the money funding his own lifestyle. (Read the story in the  Lehigh Acres Citizen.) 

I'm always amazed that people are so willing to hand over money to fund other people's private business ventures. Even legitimate startups have a high failure rate, so making that type of investment is a huge risk. 

[Photo Credit: Lee County Sheriff's Department]

Watch out for online job ads

Some of them are actually scams, designed to steal your identity, says the Financial Industry Regulatory Authority. In one case FINRA cited, the information was stolen through Craigslist job ads. FINRA offers these tips to avoid becoming a victim.

Should some fraudulent insurance sales practices be a crime?

Florida CFO Alex Sink wants to make it a felony for insurance agents to forge signatures on insurance and annuity documents or trick people into swapping one annuity or insurance policy for another. But, as my colleague Jennifer Liberto wrote today, Sink blames Metropolitan Life for trying to block the bill's passage. In the story, Rep. Clay Ford expresses concern about sending more people to prison, claiming "we already have prisons filled with people who commit white-collar crimes." I'd call that statement extremely doubtful. The armed robber who steals $10 from someone on the street is far more likely to go to prison than the insurance agent who steals someone's life savings. So far no insurance agents have even had their licenses revoked for selling the EISA fraud.

Senate Bill 2082 also increases the penalty-free cancellation period on policies from 10 to 14 days.

Phony broker used St. Pete address

Scamsters know it can take years for investigators to catch up with them and by then they've already moved on with their money. The SEC this week launched a new early-warning system known as "PAUSE" for Public Alert: Unregistered Soliciting Entities. When a complaint comes in and the SEC verifies the company is not registered to sell securities, the information will be made public on the SEC Web site. The initial list includes Global Direct Financial Inc., which listed a St. Petersburg address even though it apparently never had an office here. The SEC says it's likely that Global wasn't even in the United States. This posting from a Motley Fool message board offers some insight into how Global and similar companies operate.

Want to throw $50 down the drain? Sign up here

I am constantly amazed by how readily people accept some of the outlandish statements scamsters make. Someone recently told me about Imperia Invest IBC, a deal that is so obviously a scam it would be hilarious if it weren't for the sad fact that people are being duped out of their money. You put up $50 and as soon as they've accumulated 10,000 members ($500,000), they're going to make all kinds of money for you with a traded endowment policy trading foreign currency and using secret offshore banks. Ultimately payouts will be in the billions. After you pay them $50, they're going to loan you $80,000 for your trading account, which will earn 1.2% A DAY guaranteed and compounded. Apparently the Imperia people aren't too good with a  financial calculator, but in their example, they say that after six months, your share of the profits will be $134,000. The Web site is written in very awkward English, causing me to assume that it was written by a foreign scamster, maybe one of the notorious Nigerians. However, I've been told that the wording reflects the way deaf people communicate in sign language. In other words, this site is written by someone who knows sign language and is targeting deaf people with this scam. How sad.

I assume, based on the way this is presented, that this is only hitting people up for $50 and once the scammers have as much money as they think they can get, they'll shut down. Of course there could be something else going on---identity theft or a follow-up request for a larger amount of money.

Why prosecutors strike plea bargains

The Orlando Sentinel has an interesting piece today explaining the reasoning behind plea agreements, both from the prosecutor's and the defense lawyer's points of view.

Scam State: Series warns readers about fraud

Some of you may have noticed that the Times has been running an occasional series about financial fraud to educate readers about how they work. Here are the ones we've published so far:

Ponzi schemes, Lottery and Sweepstakes Scams, Pump and Dump Schemes, Tips to Avoid Becoming a Scam Victim

Do you have a scam you'd like to suggest for this series? Each scam we highlight needs to be illustrated with an example that has a Tampa Bay connection. The Lou Pearlman case is obviously an example of a Ponzi scheme, although I used a different example here so people wouldn't get the impression it's the only Ponzi scheme around. In fact, the majority of investment frauds are a variation of a Ponzi scheme.

On a related note: Tonight's Dateline program (7 p.m., NBC) turns a spotlight on the highly questionable sales pitches insurance agents use to sell annuities to older people.

Today's Supreme Court ruling is a setback for burned investors

The Supreme Court ruled today that investors have no right to sue those who "aided and abetted" securities fraud but were not the primary perpetrators. This is bad news for investors looking for "deep pockets" as a source of recovery after fraud is discovered.

While I am not a lawyer, it would seem to me that in the Lou Pearlman case, this ruling would hurt investor attempts to recover from banks that Pearlman used to hold or transfer funds or from lawyers and other third parties with whom Pearlman did business. So far as I can tell, it does not apply to situations in which investors dealt directly with lawyers or sales agents who advised them to purchase the fraudulent investment.

Some other takes on this story: Washington Post, Christian Science Monitor

 

A library visit that's better than free

A visit to the St. Petersburg Public Library this Sunday could pay big dividends. Investor Education @ Your Library looks like a worthwhile program for those who want to learn more about investments, planning for college or retirement or planning for income in retirement. The free program is from 1:30 to 4:30 p.m. with registration at 1:15 p.m. at the main library, 3745 Ninth Ave. N, St. Petersburg.

Participants will each receive the following booklets and guides:

  Five Keys to Investing Success

  Getting Help With Your Investments

  The Six Strategic Steps: Your Roadmap for Investing Wisely 

You can get more info here or by calling the library at (727) 893-7724.

[Florida Office of Financial Regulation photo]

Don't become an investment victim

Older investors are the prime target for most investment advisers, whether they're selling stocks, bonds and mutual funds, annuities or high-risk promissory notes. Fraud is the biggest concern, but an investment doesn't have to be a total scam to be bad for you. It might just be unsuitable for someone in your circumstances. It might be misrepresented in terms of the promised return or in failure to mention the risks and drawbacks - or both.

Learning more about investments and the sales pitches unscrupulous advisers use is your best defense. Here are some tips from the SEC regarding investment seminars. Here is yesterday's report on the problems regulators found in investment seminars aimed at seniors..

To check out an investment adviser or investment offering in Florida call 1-800-848-3792.

To get someone to give a presentation on investment fraud to your group contact Florida Seniors Against Investment Fraud (FSAIF).

To learn more about safe investing, here's a new Web site with helpful articles and advice for older investors and for military personnel. Here are some tips from the AARP and additional info from the SEC and the North American Securities Administrators.

Two places to get a referral to a fee-based financial adviser are the National Association of Personal Financial Advisors (888-333-6659) or the Institute of CPAs with personal financial specialist designations ((888) 999-9256).

(Photo credit: Getty Images)

There is no free lunch

"Free" lunches and dinners targeting seniors are a marketing staple for some investment advisers, but they can cost the unwary investor plenty. Securities regulators released a scathing report today of seminars as they are being conducted in Florida and six other states. St. Petersburg Times story. Here are some findings:

*100% of the seminars were sales presentations, even though many are advertised as "educational" or promise "nothing will be sold."

*50% featured exaggerated or misleading advertising claims, such as "how to receive a 13.3% return" and "how $100,000 can pay $1-million to your heirs."

*23% involved possibly unsuitable recommendations, such as risky investments to investors with conservative objectives.

*13% appeared to be fraudulent, including possible liquidation of accounts without customer knowledge and sales of apparently fictitious investments.

Next up for review: the use of dubious professional designations that mislead investors and pre-retirement seminars.

Update: I have received quite a few requests for names of the firms included in this examination and how they performed. The regulators would not release this information.

(Photo credit: Getty Images)