Investment Fraud

Americans lose an estimated each year to investment fraud $40 billion

Why? n Lack of financial awareness n Poor planning early in life n Low rates of return –Certificates of deposit, savings accounts, etc. n Rash decisions n “Easy money” n Too trusting n Fear

The Victims Include... n Doctors n Lawyers n Teachers n College Students n Business People n Retired/Elderly No one is immune to fraud. Anyone can become a victim.

Outrageous Promises n “Double your money in ninety days!” n This is a risk-free guarantee n High reward with low risk n You are lucky to be getting in on the ground floor

Financial Professionals n Unsuitable investments n Poor investment advice n Fraudulent broker acts n Insurance agents/unregistered agents

What Can Be Done? n Report suspicious or fraudulent activities n Check into the investment opportunities and the people selling them

What Can Be Done? Financial Education Investigate Before You Invest

Investment Myths n High reward with no risk n Scams do not happen to smart people n.com companies are a sure bet n This investment is guaranteed/insured n No written information is available n No securities license or registration is necessary to sell this

Red Flags n This offer is only good today/this is a limited-time opportunity n Just give me your credit card and checking account number n This is only available to a select group n I get nothing out of this deal

Red Flags n Do not tell anyone -- not even family n I will come to you; you don’t have to come to me n Foreign banks pay great interest rates and have no taxes associated with them n This is “insider” information

Common Types of Fraud n Pyramid Schemes

Common Types of Fraud n Ponzi Schemes Charles Ponzi Don Pratt n International Prime Bank Schemes Royal Meridian Bank n Affinity Fraud The Church of God, Inc. n Promissory Notes James Carpenter

Common Types of Fraud n Unscrupulous Brokers Poor advice Unsuitable investments n Senior Fraud Variable and charitable gift annuities Viaticals Promissory notes n Insurance Agents/Unlicensed Agents Any agent selling securities must be licensed through the Secretary of State Todd Rokita’s Office

Avoiding Fraud n Hang up the phone n Ask questions! n Remember, those touting investments are not doing it to help you out n Contact Secretary of State Todd Rokita’s Office for information regarding the opportunity and the person offering it

Secretary of State Todd Rokita We Are Here to Help Hoosiers! n Fraud Hotline (800) n Website n Location 302 W. Washington St. Room E-111 Indianapolis n Report Investment Fraud n Check On –Securities –Franchises –Loan Brokers –Exempt Filings –Broker Dealers –Investment Advisors –Enforcement Actions