Investment adviser Melvin Leonard Wimmer Jr. of South Carolina has been convicted of securities fraud resulting in three million dollars of losses to his clients many of whom were elderly. On behalf of his clients he invested primarily in high risk securities and futures contracts, losing most of his clients’ money, however, rather than report the losses to his clients, Wimmer, acting as both the investment adviser and the custodian of the investment created fraudulent account statements that he gave to his clients that falsely listed gains of 8-10% annually rather than the tremendous losses actually suffered.
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’s 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. Wimmer’s investments were primarily high risk futures and options contracts that are inappropriate for many people, particularly elderly investors for whom such risky investments may not be a good choice. You also may want to check out the SEC’s investor education website at
Of course, you always should be skeptical of investment advisers that promise huge investment returns. If it sounds too good to be true, it usually is.
In addition, a red flag in both the Bernie Madoff scam and Wimmer’s scam is when your investment adviser is also the custodian of the account.  They should never be the same person. Wimmer operated in both capacities and was able to falsify records to temporarily hide his fraud. Always have a separate broker-dealer hold your investments in addition to your individual adviser.  This way the actual funds and investments are monitored by a third party.
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