Here’s a Financial Scam We Need to Watch Out For

By on Apr 27, 2021

There’s a financial scam that’s been going on for years now, and you may not fully know about it. It typically involves someone who is operating on their own as an investment advisor, apparently showing tremendous investment returns for their clients, and their clients then get so excited about this, that they begin recruiting their friends to get involved in the investment opportunity along with them.

The investment advisor will then typically hand their clients monthly or quarterly financial statements, showing the clients the great rates of return the advisor is generating for the money that’s been invested….maybe even rates of return of 12-14% or more per year, and the clients then get thrilled in seeing these financial statements, and in feeling that their investment is growing solidly through what their financial advisor is accomplishing for them.

But the financial advisor is really just fabricating what’s being shown within these financial statements, and then confiscating their clients’ money, and spending it on themselves.

The advisor could be buying houses, yachts, exotic sports cars, or other forms of material items and investments, but they’ve basically seized their clients’ money for their own personal gain.

In addition, the reason this scam can continue on in being perpetrated, is because when the clients are convinced that they’re currently getting such great rates of return on their money, why would they ever want to withdraw it, and then invest it somewhere else?

The scam will then typically be discovered when one or more clients have a need for some or all of their money, and then they get continual excuses from the advisor as to why the money isn’t available right now for them.

In some ways, there are similarities here to what Bernie Madoff was accused of doing, but there are other people also who are doing this on a smaller scale, and oftentimes doing so within their own local communities.

Typically the victims are people who are in their forties or older, who are looking for a place to invest their money where they can get a good rate of return on it, and they are lured into this scam by the excitement and trust of their own friend making the recommendation for them to utilize the same financial advisor, as well as trusting in the financial statements that are being presented by the advisor to their clients, too.

But when it comes to the financial statements, sometimes these scam artists will even show the detail of the exact timing of when they supposedly bought and sold individual stocks within the portfolio, to make it all seem even more convincing, as they know what the exact stock prices were on the individual days throughout the period that the financial statements are encompassing, and they can simply then incorporate this information and detail into the fabrication of these financial statements.

With this in mind, the reason I’m mentioning this to you, is to make you more aware of the fact that this is going on, and to potentially help you to protect a friend, a family member, or a loved one who may already, or may potentially, be investing their money through someone who is operating like this.

So in summary, when someone purports to be delivering investment returns to their clients that far exceed what other financial advisors have been accomplishing, this is a major red flag that needs to be fully investigated before ever investing with them.

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