by Brian Mahany
If the figures coming from the North American Securities Administrators Association are correct, the number of fraud actions involving victims over the age of 50 has more than doubled in just one year. State and provincial securities agencies logged 506 enforcement actions in 2009. By last year that number skyrocketed to 1241.
That number may not sound like a lot but it is. Remember, these are actions taken against fraudsters. Enforcement agencies only have enough resources to investigate a small percentage of the reports that come in each year. And even fewer people report the crime. For each case prosecuted, many others are not investigated or even reported.
Often older victims are too embarrassed to report that they were the victims of an investment fraud. Other times they are in such an advance state of dementia or poor they don’t even know they were scammed.
Elder financial abuse is rampant. As baby boomers enter their retirement years, they continue to be the fastest growing age group of our population. That means that numbers of elder fraud victims will likely continue to increase.
What can you do? First, deal only with reputable brokers. Although just about every brokerage firm has had a few bad apples, larger firms can make good your losses if you are scammed. Stockbrokers that rely almost exclusively on cold calls frequently work for so called boiler room shops; firms that are here one day and gone the next.
Be very wary of brokers that pitch you because you belong to the same church, ethnic group or religion. Many people have been victimized by these affinity frauds.
Make sure that you understand what you are purchasing. If you can’t easily explain how it works then you probably should be making the investment.
Another question to ask is how easy is the investment to sell if you suddenly need the money? Frequently older investors find themselves stuck in illiquid real estate trusts or complex derivatives for which there is no developed secondary market.
Finally, don’t be afraid to look over the shoulder of your parents or older relatives. Make sure they aren’t being taken for a ride. If they can’t explain what they want to purchase or if they only talked to the stockbroker by telephone and never met, its time to get involved and ask serious questions.
We have met far too many clients that are spending their golden retirement years worrying about money. Money that was taken from them by fraudsters, greedy stockbrokers and even accountants and bankers.
There are remedies of course for victims of investment fraud but those remedies are only as good as the company or person behind the investment. If you were scammed by a stockbroker or financial professional, there is probably a “deep pocket” – a solvent company or insurance policy that can pay. Recovering assets from boiler room operations or unlicensed people can be difficult, however.
A little prevention and due diligence can go a long way to making sure you or someone you love doesn’t spend their golden years worrying about how they can afford food or medical bills.
If you or someone you love has been the victim of a fraud committed by a stockbroker, accountant or other financial professional, call us. The call is confidential and without obligation. For more information, contact attorney Brian Mahany at (414) 704-6731 (direct) or by email at .
Mahany & Ertl – America’s Fraud Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan & Portland, Maine. Services available in most jurisdictions.