Longtime Scamicide readers will remember that I have written many times about a wide variety of investment scams.   There are many different investment scams, but generally, people often become victims of investment scams when they invest in things that they don’t understand (a common thread with victims of Bernie Madoff), fall victim to affinity fraud by investing with someone merely because they share a similar background or invest with someone who is both the broker and the custodian of the asset which enables the scammer to be able to control the investments and the records of the deposits or fail to investigate the investment advisor before investing. Today’s Scam of the day involves the recent conviction and sentencing of investment advisor James Booth who combined two of those three situations.

Booth who started off as a legitimate investment advisor moved into scamming his clients in 2013 when he lured them into moving their investment funds from conventional brokerage account investments into a vague investment entity which Booth falsely promised his clients would grow tremendously with no risk.  Investments that provide huge returns with no risk do not exist and this should have been a red flag to investors.  Unfortunately, it was not and Booth’s victims lost millions of dollars as Booth took their money and used it for his own personal purposes.  Booth also acted as both investment advisor and custodian for the investments which allowed him to falsify investment records that he sent to his client/victims in order to fool them into thinking their investments were doing well.  It is never a good idea to have your investment advisor also be the custodian of your investments for this reason.


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. https://www.nasaa.org/investor-education/how-to-check-your-broker-or-investment-adviser/ Many investment advisers will not be required to register with the SEC, but are required to register with your individual state securities regulators.  You should also check with the Financial Industry Regulatory Authority (FINRA) for information about the particular  investment adviser. https://www.finra.org/investors/protect-your-money/ask-and-check

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  as well as the victims of James Booth.  You also may want to check out the SEC’s investor education website at www.investor.gov.  Scammers can be very convincing and it may sound like there is a great opportunity for someone to make some money, but you must be careful that the person making money is not the scam artist taking yours. Additionally, investing with someone merely because you trust them because you have heard them on the radio or television is dangerous.  Having the same person advise the investment and control the investment is a common thread among Ponzi schemers because it enables them to falsify documents to make the investment look profitable. Generally, for additional security it is desirable to have a separate broker-dealer act as custodian for investments chosen by an investment adviser.

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