Avoid Investment Scams by Asking Questions, Authenticating

Florida is the retirement capital of the U.S., and as such has a massive number of financial gurus, real estate experts, investment specialists who flock to the state because of the high number of senior citizens with valuable investment funds.

Florida is a common place for retirement. Living in sunshine is a dream for those who have worked hard all their lives and who have saved, put together their 401(k), IRAs, annuities, savings, pensions and social security funds for their retirement years.

Knowing that there is a predisposition in the state for a higher than average number of both retirement assets and a large group of people with those assets, there is also a large group of people determined to take those funds from seniors and others who come to Florida to retire.

While senior citizens, retirees, the elderly are targets and marks in many scams, anyone who has saved, who dreams of retiring early, striking it rich, or who believes in get rich quick scams can be lured into investing in the wrong kind of investments.

What is an Investment Scam?

Investments are an agreement between two parties but when one party defaults by using fraudulent tactics to keep your money the agreement is broken. The investment becomes an investment scam.

If you have been ripped off on an investment of any kind your first step should be to consult with an experienced Florida securities and investment attorney to find out if you have a chance to win or recover your investment.

If you have been ripped off, you are not alone. In the U.S., the Securities and Exchange Commission regularly issues warnings to people to be careful of a new fraud.

How to Avoid an Investment Scam

There are many tips to avoiding an investment scam and the S.E.C. suggests that ask questions of anyone who approaches you by touting an investment opportunity. Ask the person whether he or she is licensed and whether the investment they are promoting is registered with the SEC or with a state governing body.

Then, write it down and call and go online to find out for certain if the business, the firm, the individual is licensed and that the investment is legitimate.

Don’t just listen to the person who is trying to gain your trust, investigate. Ask for paperwork and then check with your state to find out if the individual and the business are licensed for the financial investment that is being suggested to you.

Investment Scams to be Aware of

Real Estate

While investment advice can be legitimate and beneficial, it is important to look carefully at what an investment scheme or seminar is offering. Attending an expensive seminar or investing in the wrong kind of scheme can be costly mistakes. Traveling seminars, Internet-based seminars, seminars that pop up out of the blue and which are advertised in banners online.

They advertise using corporate, professional visuals. Price points, a phone number and a website. You visit the website and a video pops up explaining how a low-cost investment in a real estate kit. The kit can teach you how to buy foreclosed homes with no money down that you can purchase and then turn into a rental property. The information encourages you to call and register for a seminar that will be held at a local hotel and lead by a world-renowned real estate expert.

Real estate investments are like any financial investment and should be fully investigated and vetted. Buying a kit, listening to an expert will not transfer knowledge or real estate investing skills. If you decide to participate and attend for information purposes, be certain to find out if the event is a state-licensed event. Contact the Florida Real Estate Licensing board Division of Real Estate – Department of Business and Professional Regulation http://www.myfloridalicense.com/dbpr/re/

Risky Investment Strategies

Some investment seminars may try and convince you to follow high risk investment strategies like borrowing huge sums of money to buy property. Others promote investments that involve lending money on for no security or with other risky terms.

Locked In Retirement Account (LIRA)

If someone tries to tell you there is a way to take the money out of your locked in retirement account (LIRA) without paying tax, don’t believe it. In most cases, you have to reach age 55 or older before you take money out. And there are often limits to how much money you can take out each year. Also, you likely will have to pay tax on the money you withdraw. If someone tells you differently this may be a scam.

Ponzi Scheme

 A Ponzi Scheme is a type of pyramid scheme, one that is built on the money of initial investors to pay a small group of people. The money from new investors is used to provide a return to previous investors. The scheme collapses when money owed to previous investors is greater than the money that can be raised from new ones because the money runs out. Ponzi schemes always collapse eventually.

Natural Disaster and Donation Scams  

Hurricanes, floods, oil spills, and other disasters often give rise to investment scams. These scams can take many forms, including promoters touting companies purportedly involved in cleanup efforts, trading programs that falsely guarantee high returns, and classic Ponzi schemes where new investors’ money is used to pay money promised to earlier investors.

Exciting, Low-Risk Investment Opportunities Online

Being asked to participate in exotic-sounding investments such as wireless cable projects, prime bank securities, and exotic food, plant or animal farms have been offered through the Internet. But no investment is risk-free, and particularly online investments are not even real. Scams that sound good, look good and “seem real” can be false. Just because it’s online doesn’t mean that it’s real. Scammers work hard to make stories, pictures, videos and information seem real.

Off-shore Frauds

At one time, off-shore schemes targeting U.S. investors cost a great deal of money and were difficult to carry out. Conflicting time zones, differing currencies, and the high costs of international telephone calls and overnight mailings made it difficult for fraudsters to prey on U.S. residents. But the Internet has removed those obstacles. 

Financial Terms to Watch

Prime Bank is a term that is used to describe the top banks in the world. Prime banks trade high quality and low risk instruments such as world paper, International Monetary Fund bonds, and Federal Reserve notes. You should be wary when you hear this term because it is often used by scammers trying to add legitimacy to their cause.

Pump and Dump 

A pump and dump is a stock investment scam which uses the illegal practice where a small group of insider’s buy a stock before recommending it to thousands of investors. The result is a quick jump and rapid increase in stock prices followed by an equally fast drop.

The investors who bought the stock early sell it off quickly when the price peaks at a huge profit. Although stock fraud is probably the best-known and most-publicized form of securities fraud, investors have lost money due to broker misconduct in a wide variety of investments.

Off Shore Investing 

Off-shore investments have become one of the more popular scams to trap investors. Different currencies and time zones, expensive international telephone calls had made it difficult for fraudsters to prey on North American residents. However the Internet has eliminated these barriers. Be all the more cautious when considering an investment opportunity originating in another country. There are not international laws that are standard, enforceable or relative to U.S. standards.

Green Investments

Common energy investments include commodities, exchange traded funds, stocks and bonds and joint ventures. However, do not invest in energy projects including wind turbines, solar panels, biodiesel, ethanol, coal, oil, gas, hydrogen, wave, geothermal, oil sands and liquefied natural gas if you are not familiar because you may be easily mislead by scammers who will prey on your commitment to green energy or wanting to help the earth, conserve energy or be a part of a new energy that will be safer, better, etc.

Unscrupulous promoters may use innovative technology news or findings to take advantage of unsuspecting investors by engaging in fraudulent practices. Scammers may be operating a fraudulent or shell company that doesn’t produce anything.

Avoid Being Ripped Off By Asking Questions and Verifying Information

Avoid investment scams by being educated, alert and aware. If you have accrued investment or retirement funds, don’t give up your hard earned money or savings or earnings easily. Research people, companies and information and remember that get rich quick schemes are abundant. If it sounds too good to be true, it probably is.

Whether you live in Florida or anywhere else, if you are a victim or a target of an investment scheme, consult with the experienced attorneys at Lanigan and Lanigan, P.L. Eric Lanigan and Roddy Lanigan provide investment and security losses legal services to anyone who has been ripped off in any investment scheme.

Eric Lanigan has practiced Florida law since 1976; Roddy Lanigan since 2007. Together the Lanigans provide aggressive representation with a personal touch to clients who have experienced financial losses in investment schemes.