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Money August 2012

Dollar Sense

What You Should Know about Scams and Scoundrels Who are Out to Steal Your Money

By Teresa Ambord

John Gannon is the president of the Investor Education Foundation, part of the government’s Financial Industry Regulation Authority (FINRA). He says the most likely target is 55- 65, male, college-educated, and financially astute.

Who’s the Most Likely Senior Group to be Targeted for Fraud?

You might be surprised. Every group is vulnerable. The stereotype answer is, the most likely target is the elderly shut-in who makes a new young “friend.” The friend keeps the senior company and listens to all the stories that the family is tired of hearing. Then in the end, the senior loses his or her life savings to that friend. Sadly, it happens. But again, that’s the stereotype, and it’s wrong.

John Gannon is the president of the Investor Education Foundation, part of the government’s Financial Industry Regulation Authority (FINRA). He says the most likely target is 55- 65, male, college-educated, and financially astute.

Why these people? They may have been conservative investors who are tired of minuscule growth, and are ready for a little more risk. Because they are educated, they may see themselves as less likely to be duped, more able to spot a phony. So, when higher than the usual returns are offered, they are drawn in.


Who Are the Scammers That Target Seniors?

Often, it is other seniors. They too, are tired of the low returns and are looking to pad their situations a bit. So some become more aggressive in pushing products that have higher risk and thus pay higher commissions to the adviser.

Many times, people looking for advice seek it from someone like them. That may be someone of a similar ethnicity, cultural background (Hispanic, Asian, etc.), or religious affiliation. Or it might be a fellow gray hair.

In addition, says Gannon, older investors are less likely to get a second opinion, even from their spouses. “They’re sure they know what they’re doing,” said Gannon, and they go for it.

If you’re considering using a particular financial adviser, realize that a person can fabricate credentials for this profession. Before you invest with someone, verify his/her license status by contacting BrokerCheck or your state’s securities regular. ( You can also check to learn whether the company is sound, or has declared bankruptcy or been sued for fraud.


The Free Lunch Sales Pitch

Another caution from Gannon is this: stick to investments that you understand. Scams often center on complex products that the investors don’t really understand. FINRA and the Securities and Exchange Commission (SEC) spent a year investigating the “free lunch” retirement planning seminars. They purport to be just educational events, but most of the time they are sales presentations. Most are led by reputable advisers, and about 13 percent are pure fraud, said the SEC. Gannon says often these seminars offer products that are hard to understand, like indexed annuities. They may not be scams, but they are complex. He recommends sticking to what you understand. The most important thing is, realize that gray hair and wisdom do not necessarily go together, whether the gray hair is yours or the adviser’s, or both.


Renters Beware: Looking for a Home to Live in or Vacation In?

Good Morning America recently did two stories warning people who are looking to rent homes, for vacation or to live in. The Better Business Bureau (BBB) is being pounded with complaints from people who answer ads to rent a vacation home, usually way below the price you’d expect. One family answered an ad on to rent a sprawling home in Lake Tahoe, California, for $400 a night. It was advertised as having room for 14. So as the family’s members began to arrive, so did the owner. He said, “Sorry to tell you this, but you guys have been scammed.” His home was not for rent. Someone had listed it, collecting nearly $1,500 from the family. The owner confirmed that this had happened before, many times. told reporters they suspend people who post fraudulent ads, and work with victims to get their money back. But, they say, consumers need to educate themselves to avoid these scams.

Second scam. People who have legitimately listed their homes for sale are finding people looking in their windows, prowling their backyards uninvited, and knocking on their doors at all hours. The reason? Scammers find the home details and pictures on online real estate sites, then list the home for rent at a ridiculously low price. Victims buy the lie, literally, wiring money in the sincere belief they are securing a new dwelling place, at a remarkable price.


What can you do? Here are tips offered by Better Business Bureau:

  • Get everything in writing.
  • Google an image of the vacation home. If it comes up on multiple sites, keep looking.
  • Never wire money. Use a credit card or PayPal instead.
  • And, as always, if the price seems too good to be true, assume it is a scam.


Just So You Know…

I, and many others, have been alerting readers to a pervasive scam where thieves call taxpayers, pretending to be aggressive IRS or FBI agents, or police officers. The callers tell victims they owe back taxes and are about to be arrested if they don’t pay up immediately, usually by paying the supposed debt in a wire transfer, or a prepaid debit card.

The scam is still raging, even growing. But I thought you might like to know that sometimes, the bad guys lose. Sahil Patel organized a massive fraud that extorted $1.2 million from innocent taxpayers, not to mention the fear and stress the taxpayers suffered. Patel was just one of the organizers, but he’s been caught, convicted, and is sentenced to 14 years in prison, plus he must forfeit $1 million.

It takes a while, but sometimes justice prevails. Just remember, similar scams continue in spite of this arrest. If you have been victimized or know someone who has, go to (which is the website of the Treasury Inspector General for Tax Administration on the IRS Impersonation Scam Reporting tab in the upper right corner), or call the TIGTA hotline at 1-800-366-4484.


Teresa Ambord is a former accountant and Enrolled Agent with the IRS. Now she writes full time from her home, mostly for business, and about family when the inspiration strikes.

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