New FRAUD Schemes Prey on Personal, Religious and Cultural Connections to Build Investor Confidence


Ike Devji, J.D.
© 2009

Something quick, down and dirty I want all our clients and partners to be aware of, as you folks are the ideal candidates for the bad guys – you are among the most successful people in the U.S.

http://www.fa-mag.com/fa-news/4036-sec-advisor-scheme-targets-chinese-americans.html

UPDATE 8/7/09 – Former Rabbi Charged in $35M Tax Fraud Scheme http://tinyurl.com/muesxf

As markets continue to fluctuate and rattle investor confidence a new series of alternative investment fraud schemes are emerging and being exposed faster than I can post all the details.

In times of crisis many people feel comfort doing business with a personal or social contact or a member of their own religious or ethnic community. Unfortunately that comfort level is replacing normal standards of due diligence and often intentionally sidesteps the professional advisor relationships that an investor may have in place, often with tragic results.
Many of these schemes are dressed under broad terms such as private offerings, hedge funds or are related to purchasing intangibles, like deeds of trust.

Common excuses for exclusion of the investor’s advisors include:
– They won’t know how this works;
– Your friends are all in the deal and they all had their people check it out;
– They will say no because we will compete with them;
– This is a special private deal for friends and family only;
– We have an NDA (non-disclosure agreement) you will need to sign and keep this offering confidential;
– We need you to make a decision and fund immediately because we have other investors waiting for this opportunity;
– We have our team and they have checked this out with our own high dollar lawyers;
– We have the “support” of such and such big bank and you they checked us out

Any one or even a few of these may be actually true and valid on any deal, but I have never seen a legitimate opportunity where the promoter used all the tricks on this list. If they have a deal that is worth being part of they will allow you to ask questions and do your homework.

Will your CPA or other advisor have an issue with signing the NDA if he is reviewing an offering on your behalf? I doubt it.
Invest, make money – take calculated risks and allow your team to help guide you! As always – walk with awareness and call us for help if you need it.

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