Scam of the day – October 1, 2012 – Self-directed IRA scams

Self-directed IRAs may be a good retirement investment vehicle choice for people who are seeking alternatives to the traditional forms of investments for IRAs such as mutual funds, or CDs.  Among the investments you may choose for including in your self-directed IRA are rental real estate, precious metals, unregistered private securities or even bull semen.  One important element of a self-directed IRA is that you must have an independent, qualified third party act as the custodian for your investments and that’s where the potential for scams come in.  Although there are numerous legitimate, self-directed IRA custodians from which you can choose including the Vanguard group, there also are many scammers who prey upon people seeking self-directed IRAs by promising huge returns for using their services and investment counsel.  Some of these have put on free seminars in which they persuade people to invest with them, but take their money in a Ponzi deal and the investors never see their money again.

TIPS

There are a number of things you should do if you are considering a self-directed IRA.  As always, only invest in investments that you understand.  Unregistered securities can be a risky investment, particularly if you don’t truly understand the companies behind the investments.  Always check out the record of an investment advisor before you do business with him or her.  Go to the SEC’s website, your state securities administrator’s office and the website of FINRA, a private regulatory organization at www.finra.org to look up your particular advisor to see if there have been complaints or disciplinary action against him or her in the past.