Today’s Fraud Schemes Target Older Investors
By James G. Dowell
The New York Times published an article titled, “Fight Financial Fraud With Tricks of Your Own,” that warned older investors of increased fraud specifically targeting their age group. The article cites older investors as being targets because of their on average higher net worth, new inherited money from their parents, and easier accessibility by crooks via the internet and other avenues. The article’s purpose is to inform the reader about various schemes that have been popular recently involving theft and ways to avoid these encounters. The new federal JOBS act, allowing people to fund a business collectively with less governance from the SEC and the ability to offer shares directly to the public, has been seen as an opportunity by experts for criminals to commit fraud. Fraud examiners, such as Lou Stanley, state that start-ups can be “incredibly dangerous.” He says that criminals will create false entities, sell promissory notes, and never make good on returns to investors. Furthermore, Stanley believes these schemes could be particularly dangerous for older investors, who are on relatively fixed incomes and depend on their investment returns to support themselves financially. The article goes on to note that criminals have been paying close attention to the increasing price of particular commodities, exploiting investors in thinking that they will receive a high return or that they are on the forefront of a new discovery, such as untapped oil fields or new machinery in a particular industry.
In addition to the exploitation of highly sought after commodities, criminals have also been targeting recovering industries, such as the real estate market. A common scheme is to sway people into investing in older properties, promising renovations and high returns on investments, but then defaulting on pay out.
The author urges investors, especially the older crowd, to involve as many people in financial decisions as possible. By gaining a new perspective on investments from family, friends, and accredited professionals many fraud schemes can be avoided. It is extremely important to perform proper due diligence and ask detailed questions before investing your hard earned money. The article even mentions using background checks on brokers and advisers before trusting them with your investment needs. In conclusions, if we are aware of possible fraud situations and equip ourselves accordingly, with accredited professionals, we can avoid falling prey to the ever-lurking fraudster.