Feds step up investor fraud education efforts – After a career in retail, he has chosen to help fight fraud as his retirement pastime. In the past 17 months alone, he has done 61 presentations as a volunteer with AARP Consumer Protection Speakers Bureau in New Hampshire.
Moldoff says he hears every few weeks from seniors at presentations who admit to him that they’ve been swindled – but, typically, with a pledge that he tells no one about it. “Very few people are gutsy enough to raise their hands and say they are a victim,” he says.
At a recent summit on investor fraud run by the U.S. Attorney’s office in Connecticut, however, the stories were out in the open. And the government was on hand to try to offer help proselytizers like Moldoff, who are trying to raise awareness of fraud in one of the most heavily victimized demographics.
At the event he attended in Stamford, Connecticut on October 1, speakers discussed an increase in scams involving reverse mortgages, the failure of victims to have done any due diligence on those they trust their money to, and a lack of skepticism when an “investment counselor” asks for funds to be paid directly to them.
Since last year, the U.S. Department of Justice says, it has charged, brought to trial, taken pleas or received sentences for more than 800 defendants in investor fraud cases. The amount taken from victims exceeds $20 billion.
To help spread the word about fraud, the Justice Department convened six regional summits earlier this month intended to mobilize a wide range of troops – from the SEC to the FBI, local police, AARP and The Better Business Bureau. The Stamford summit was followed by similar events in Nashville, San Francisco, Denver, Cleveland and Miami.
The government also set up the site stopfraud.gov to help educate consumers about risks and warning signs.
“We have seen a sharp rise in the number of investor fraud schemes,” says David B. Fein, U.S. Attorney in Connecticut, who hosted the first of the six summits. He says between 2008 and 2011, FBI statistics show at 136 percent increase in investor fraud schemes. “Many of the schemes we are prosecuting have been in process for five, 10, even 20 years.”
The economy has played a part in that, Fein says. Those operating a Ponzi scheme, for instance, can sustain it for a long time – collecting money from new victims to ensure there’s money on hand when needed. But when fewer people are attracted to the scheme, it can unravel. “As the waves recede you see what’s on the beach.”
In many instances, the fraud is so sophisticated it becomes easy to skip over the precautions, says U.S. Attorney Jerry Martin of the Middle District of Tennessee, who hosted one of the summits. So-called affinity fraud has been a big problem in that part of the country.
“It shouldn’t matter who you are investing with, you need to do your homework,” Martin says.
Gerri Walsh, president of the FINRA Investor Education Foundation, who attended the summit in Connecticut, says a big takeaway is that those who are being victimized come from all demographics. “It’s no longer exclusively older people. You realize that victims are intelligent people who are not vulnerable or isolated. There are signs that they miss when they are in the moment.”
Another attendee at the Stamford summit, Jackie Hotton MacKnight of the Better Business Bureau in Connecticut, says the summits helped bring together those with similar goals who would not normally connect, such as law enforcement and advocacy groups. They got to hear each others’ presentations – allowing a chance to refocus their own. A result, she was trained by Walsh’s group to go out and teach others to do presentations about fraud prevention.
She is scheduled do a presentation in November for up to 600 attendees. “Our goal is to reach as many communities within Connecticut as possible,” she says.