Chicago investment adviser Daniel Glick  has been charged in separate legal actions by both the Securities and Exchange Commission (SEC) and the U.S. Attorney’s Office  of stealing more than five million dollars from his clients who even included members of his own family.  Glick is accused of a variety of scams including forging checks and providing his clients with phony statements of their investments.   He also is accused of operating a Ponzi scheme.  This scam is a good example of what is called affinity fraud where people put undeserved trust in someone offering an investment opportunity because that person is “someone like me.”  Affinity fraud works because people trust other people who may share a common bond, such as family, religion or a group affiliation.   The list goes on and on.  Scammers take advantage of every connection they can make with their victims to gain their trust and then steal their money.
Meanwhile, Glick was barred from acting as a financial adviser by the Financial Industry Regulatory Authority (FINRA) three years ago following perpetrating earlier frauds.
TIPS
Before investing with anyone, you should investigate the person offering to sell you the investment with the Securities and Exchange Commission’s Central Registration Depository.  This will tell you if the broker is licensed and if there have been disciplinary procedures against him or her.  You can also check with your own state’s securities regulation office for similar information.  Many investment advisers will not be required to register with the SEC, but are required to register with your individual state securities regulators.   You can find your state’s agency by going to the website of the North American Securities Administrators Association.
You should also check with FINRA for information about the particular investment adviser.  It is also important to remember that you should never  invest in something that you do not completely understand.  This was a mistake that many of Bernie Madoff’s victims made.  You also may want to check out the SEC’s investor education website at www.investor.gov.
In addition, a red flag in both the Bernie Madoff scam and the scam of which Glick is accused is when the person advising you to make the investment is also the custodian of the account.  They should never be the same person.  Always have a separate broker-dealer to hold your investments in addition to your individual adviser.  This way the actual funds and investments are monitored by a third party.