What is old is new again. In 2008 when I wrote “The Truth About Avoiding Scams” I described High Yield Investment Program scams. These scams have many variations, but essentially the scammers promise that they have access to to secret investment portfolios of the world’s most elite banks that generally only the wealthiest people have access to. Of course, there are no secret investment portfolios and the entire scheme, including counterfeit documents made to appear as if there really are bonds paying as much as 50% a week, is just a glorified Ponzi scheme.
Recently, John C. Nock, the founder of The Brittingham Group along with Brian Brittsan, Kevin Griffith and Alexander Ituma were sentenced in Federal Court in Arkansas to lengthy prison sentences for operating a High Yield Investment Program scam between 2013 and 2021 that stole 18 million dollars from its victims.
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
You also should confirm that any investment being touted to you is registered with the Securities & Exchange Commission or your state’s securities regulators. If, as in the case of the High Yield Investment Program bonds, the investment is not registered, you can be confident that it is a scam.
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. 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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