The Securities and Exchange Commission (SEC) recently charged Allen C. Giltman, a former registered investment professional with operating a fraudulent scheme to lure investors into purchasing non-existent certificates of deposit (CDs).  The SEC alleges Giltman and others involved in the scheme stole more than 40 million dollars from their mostly elderly victims.

According to the SEC, Giltman placed Internet ads targeting investors searching for CDs with high interest rates.  These ads contained links to phony websites which appeared to be those of legitimate financial institutions.  The websites claimed that the CDs were insured by FDIC and were a safe investment.  Victims of the scam were also lured to call phone numbers found in the websites where they were persuaded to wire money to both domestic and foreign bank accounts to purchase the phony CDs.

TIPS

Websites set up by scammers that appear to be websites of legitimate financial institutions are called “spoofed” websites.  B.S.  Be skeptical.  You should always be particularly skeptical when purchasing CDs from websites found only through Internet searches.  These spoofed websites may have URL addresses that appear legitimate and have names that also may appear legitimate.

Some indications that the website is part of a scam include:

Offering interest rates higher than you  find at other financial institutions, with no penalties for early withdrawals; Promoting only CDs and no other financial products, such as banking or brokerage accounts, loans, or commercial banking services; Requiring high minimum deposits, often $200,000 or more;  and, most significantly,  Directing potential investors to wire funds to an account located outside the U.S., or to a U.S.-based account that has a different name than the financial institution claiming to sell the CD;

If the website claims the CDs are FDIC insured, verify the financial institution by using the FDIC’s BankFind tool – https://research.fdic.gov/bankfind/ – or call the FDIC to verify at 877-ASKFDIC (877-275-3342).  Make certain the name of the financial institution claiming to provide the CDs is exactly the same and not just similar to a firm verified by the FDIC.

If the website claims the CDs are offered by a credit union, verify the financial institution by using the National Credit Union Administration’s (NCUA) “Research a Credit Union” webpage – https://mapping.ncua.gov/ResearchCreditUnion.aspx – or call the NCUA’s Consumer Assistance Center at 800-755-1030.

If a website provides a name and a CRD number of a broker-dealer or an employee of a broker-dealer, use FINRA’s BrokerCheck to check whether the address provided in FINRA’s BrokerCheck matches the address provided on the website.

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