The state of that investment could be…gone! What was once a “golden investment opportunity” could morph quickly into a series of worthless, phony investment statements.
If you watch American Greed then you might recognize the signs: High rates of return, “unique” investments, quick cash turnaround, “inside” knowledge… a myriad of schemes that date back to the days of trading furs.
A colleague of mine recently informed me of an SEC “whistle blowing” program aimed at stopping these fraudulent scumbags. In 2013, that program rewarded $14M in “fees” for tips that resulted in prosecutions.
Bernie Madoff made major headlines with the funds he stole from his celebrity clientele. Similar scams occur daily on a smaller but no less devastating scale. Locally, a Northwest Indiana real estate agent was recently charged with six securities registration violations, six broker-dealer registration violations and two counts of securities fraud!
Remember…. when investing in real estate or securities with someone you don’t know (or do know!) – the devil is always in the details! No private placement memorandum? No operating agreements? No reputable attorney? Buyer Beware! Do your necessary due diligence before giving them ANY money.
Real Estate and/or Investment Scheme “Red Flags”:
• Short-Term High Rates of Return
• “Site Unseen” Deposits
• “Transaction Cost” Deposits
• Instructions/Recommendations Against Attorney/Seller/Investor Consultation
• Pressure to “ACT NOW”
• Lack of Paperwork/Documentation
Sadly, many fraudulent investments originate from friends, “trusted” advisors and even fellow church members. Should you happen to identify suspicious behavior… call someone! In fact, call us – if we can’t help you directly, we can certainly place you in contact with someone who can.
Real Estate can be a great investment, but it requires an adequate degree of investigation!