Investment scammer Anthony Diaz was recently sentenced to 17.5 years in prison upon his conviction of eleven counts of fraud related to his scamming his clients out of millions of dollars.  Diaz was a financial planner who convinced his clients to invest in high risk, illiquid alternative investment products including real estate investment trusts, business development companies, oil and gas drilling companies and equipment leasing companies.  Diaz convinced his clients to invest their life savings with him though a series of false promises including that the investments were low-risk with guaranteed protection of principle and guaranteed rates of return and that the investments were liquid and able to be easily accessed if needed.  The truth is that the investments were high-risk and speculative with no guarantees.  Some of his investors lost all of their life’s savings.  Diaz often had his clients sign blank documents with the promise that the missing information would be filled in by his office.  Diaz would then insert false information into the forms, inflating his clients’ assets, risk tolerance and investment experience in order to qualify them as suitable investors for these high-risk alternative investments.  Diaz had also been suspended by the Certified Financial Planners Board of Standards as well as investigated and punished by the Financial Industry Regulatory Authority and the Pennsylvania Department of Banking.

There are many different investment scams, but generally, people often become victims of investment scams when, such as here, 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, 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.

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’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  If investors had looked into the history of Diaz, they would have seen numerous disciplinary investigations and sanctions imposed.  In addition, no one should ever sign a blank form with an investment advisor.

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 clients of Anthony Diaz.  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.

For those of you receiving the Scam of the day through an email, I just want to remind you that if you want to see the ever increasing list of Coronavirus scams go to the first page of the http://www.scamicide.com website and click on the tab at the top of the page that indicates “Coronavirus Scams.”  Scamicide was recently cited by the New York Times as one of three top sources for information about Coronavirus related scams.

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